Optimizing New Vehicle Inventory at General Motors
Getting inventory right enables GM to meet customer demand more efficiently. Optimizing new vehicle inventory has two dimensions: determining how many vehicles, and determining which vehicle configurations. Knowing the best aggregate number of vehicles helps manage production and pricing. Knowing the best mix of vehicles helps dealer ordering. Instead of finding “how many” to provide a given fill rate, we find the inventory that maximizes aggregate variable profit. Instead of determining “which vehicles” by simply ranking vehicle configurations by sales, we apply a practical set-covering approach to span customer demand.