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Production stability in a supply-chain environment

  • Bivin, David G.

There is evidence that the growth rate of GDP in the United States stabilized in 1984 and improvements in production management are frequently cited as a source. This paper defines the quality of production as the scale of the firm's production shock and assumes that the firm can exercise control over the scale of the shock. The firm is assumed to operate in a supply-chain environment and the question of interest is what, if any, influence the adoption of more reliable production techniques by a single firm has for aggregate volatility. The results indicate that the adoption of more reliable production techniques by a single firm typically have minor effects on aggregate volatility because the benefit dies out rapidly as the product moves downstream. The exceptions are those cases in which the firm adopting the improved technology lies near the end of the chain. There is also some benefit when deliveries of materials to the initial firm in the production chain stabilize.

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Article provided by Elsevier in its journal International Journal of Production Economics.

Volume (Year): 114 (2008)
Issue (Month): 1 (July)
Pages: 265-275

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Handle: RePEc:eee:proeco:v:114:y:2008:i:1:p:265-275
Contact details of provider: Web page: http://www.elsevier.com/locate/ijpe

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  1. Margaret McConnell & Gabriel Perez Quiros, 2000. "Output fluctuations in the United States: what has changed since the early 1980s?," Proceedings, Federal Reserve Bank of San Francisco, issue Mar.
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  9. Hau L. Lee & V. Padmanabhan & Seungjin Whang, 1997. "Information Distortion in a Supply Chain: The Bullwhip Effect," Management Science, INFORMS, vol. 43(4), pages 546-558, April.
  10. Hirsch, Albert A., 1996. "Has inventory management in the US become more efficient and flexible? A macroeconomic perspective," International Journal of Production Economics, Elsevier, vol. 45(1-3), pages 37-46, August.
  11. Thomas F. Siems, 2005. "Supply chain management: the science of better, faster, cheaper," Southwest Economy, Federal Reserve Bank of Dallas, issue Mar, pages 1, 7-12.
  12. Irvine, F. Owen & Schuh, Scott, 2005. "Inventory investment and output volatility," International Journal of Production Economics, Elsevier, vol. 93(1), pages 75-86, January.
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  14. Bivin, David G., 2008. "Production management, output volatility, and good luck," Journal of Economic Dynamics and Control, Elsevier, vol. 32(7), pages 2118-2136, July.
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