PRODUCTION AND INVENTORY CONTROL AT THE GENERAL-MOTORS-CORPORATION DURING THE 1920S AND 1930S

This paper analyzes dynamics of production and inventories at the Gene ral Motors Corporation during the 1920's and 1930's. We begin by exami ning anecdotal evidence on the nature of the production control system in force during that period. Motivated by that evidence, we then exte nd the conventional linear-quadratic model of production behavior to t ake account of annual shutdown. Finally, we apply the modified model t o newly available data on monthly unit production, sales, and inventor ies during 1924 - 1940. GM appears to have been aiming to maintain a t argeted level of inventory relative to expected sales and, secondarily , to smooth production.