Inventory Optimization in Global Automotive Manufacturing Supply Chains
DOI:
https://doi.org/10.58425/jpscm.v4i1.377Keywords:
Inventory optimization, just-in-time (JIT), Just-in-case (JIC), reorder point (ROP), safety stock, economic order quantity (EOQ)Abstract
Aim: With rapid growth in the automotive industry, especially in the manufacturing of electric vehicles (EVs), efficient inventory management has become an eminent tool to minimize production cost, increase supply chain resilience, achieve higher fill rates, and inventory turnovers. This study aims to examine and evaluate effective inventory optimization strategies in global automotive manufacturing supply chains, with a particular focus on electric vehicle production, where demand fluctuations, supply chain disruptions, and stiff competition pose unique challenges.
Methods: The study employs an empirical analysis of inventory models including Reorder Point (ROP), Economic Order Quantity (EOQ), and service-level-based optimization, using real-world data and simulation to assess performance under varying supply chain conditions.
Results: The findings indicate that incorporating storage space constraints significantly impacts inventory turnover and service levels, particularly in facilities supporting electric vehicle production. EOQ and ROP models demonstrated optimal performance under stable demand, while service-factor models were more resilient under high volatility.
References
Banton, C. (n.d.). Just-in-Time (JIT): Definition, Example, Pros, and Cons. Investopedia. Retrieved June 7, 2025, from https://www.investopedia.com/terms/j/jit.asp
Banton, C., & Kvilhaug, S. (n.d.). Just in Case (JIC): What it is, How it Works, Examples. Investopedia. Retrieved June 7, 2025, from https://www.investopedia.com/terms/j/jic.asp
Boyd, K. (2023). Economic order quantity: Definition, formula, and examples. https://ramp.com/blog/economic-order-quantity
Cassano, B. (2025, April 30). What's ABC Inventory Analysis? How to calculate + examples. Tractian. Retrieved June 14, 2025, from https://tractian.com/en/blog/whats-abc-inventory-analysis-how-to-calculate-examples
Darley, J. (2025). EV Industry Faces Supply Disruption Amid US-China Tariff War. https://evmagazine.com/. https://evmagazine.com/articles/trade-war-us-china-retaliatory-tariffs
Fernando, J. (2024, June 12). Economic Order Quantity: What Does It Mean and Who Is It Important for? Investopedia. Retrieved June 17, 2025, from https://www.investopedia.com/terms/e/economicorderquantity.asp
Kenton, W. (2024, July 28). Material Requirements Planning (MRP): How It Works, Pros and Cons. Investopedia. Retrieved June 8, 2025, from https://www.investopedia.com/terms/m/mrp.asp
Kesavan, S. (2024, May 13). What is safety stock? | Definition, Importance, Formula. Zoho. Retrieved June 8, 2025, from https://www.zoho.com/inventory/academy/inventory-management/what-is-safety-stock.html
Latham, J. (2023, March). The Key Components of Replenishment Planning. stockiqtech. https://stockiqtech.com/blog/the-key-components-of-replenishment-planning/
Modula. (2025, May 8). Inventory Replenishment [How It Works & Best Practices]. Modula. Retrieved June 10, 2025, from https://modula.us/blog/inventory-replenishment/
Munichiello, K. (n.d.). Inventory Turnover Ratio: What It Is, How It Works, and Formula. Investopedia. Retrieved June 8, 2025, from https://www.investopedia.com/terms/i/inventoryturnover.asp
Olofsson, O. (n.d.). EOQ Inventory Management. World Class Manufacturing. Retrieved June 17, 2025, from https://world-class-manufacturing.com/eoq/wilson.html
Pohl, D. (2025, January). Buffer inventory: the key to smooth supply chains and happy customers. Warehousing. https://redstagfulfillment.com/buffer-inventory/
Putha, S. (2022, January 26). AI-Driven Predictive Analytics for Supply Chain Optimization in the Automotive Industry. The Science Brigade Publishers. Retrieved July 1, 2025, from https://thesciencebrigade.com/jst/article/view/355
RĂDĂŞANU, A. C. (2016, 9). Inventory Management, Service Level And Safety. Retrieved July 1, 2025, from https://www.jopafl.com/uploads/issue9/INVENTORY_MANAGEMENT_SERVICE_LEVEL_AND_SAFETY_STOCK.pdf
Reyes, S. (2025, January 7). Leveraging Vehicle Recalls to Build Trust and Drive Sales. Recall Masters. Retrieved June 28, 2025, from https://www.recallmasters.com/leveraging-vehicle-recalls-to-build-trust-and-drive-sales/
Schenker, S. (2020, August 17). Lot sizing procedures: Which is the best for industrial purchasing? GenLots. Retrieved June 7, 2025, from https://genlots.com/lot-sizing-in-industrial-purchasing/
Servigistics (Ed.). (n.d.). Servigistics. Planning Parameters Page (Fields). https://trne-prod.ptcmanaged.com/servigistics_help/en/index.html#page/PTC_Servigistics_Help_Center/parts/parts_pid/pid_planning_parameters_page.html
Thieuleux, E. (n.d.). 6 Best Safety Stock Formulas On Excel. AbcSupplyChain. Retrieved July 1, 2025, from https://abcsupplychain.com/safety-stock-formula-calculation/
Traditional Forecasting Models And Their Limitations. (n.d.). FasterCapital. Retrieved June 28, 2025, from https://fastercapital.com/topics/traditional-forecasting-models-and-their-limitations.html/1
Turovski, M. (2023, January 24). What is Reorder Point and Reorder Point Formula? MRPeasy. Retrieved June 8, 2025, from https://www.mrpeasy.com/blog/what-is-reorder-point-and-reorder-point-formula/
Upstream versus downstream information and its impact on the bullwhip effect. (n.d.). Wharton Faculty Platform. Retrieved June 8, 2025, from https://faculty.wharton.upenn.edu/wp-content/uploads/2012/04/%5B32%5D.pdf
Wiggins, M. (2023, December 14). Optimize Batch Sizes - agility at scale. Agility at Scale. Retrieved June 23, 2025, from https://agility-at-scale.com/principles/batch-size/
Zhang, Z., Chai, H., Wu, L., Zhang, N., & Wu, F. (2024, August 19). Automobile-Demand Forecasting Based on Trend Extrapolation and Causality Analysis. Automobile-Demand Forecasting Based on Trend Extrapolation and Causality Analysis. https://www.mdpi.com/2079-9292/13/16/3294
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Sadique Mohammad Abdullah
This work is licensed under a Creative Commons Attribution 4.0 International License.
The authors retain the copyright and grant this journal right of first publication. This license allows other people to freely share and adapt the work but must give appropriate credit, provide a link to the license, and indicate if changes were made. They may do so in any reasonable manner, but not in any way that suggests the licensor endorses them or their use.
