[kevin2323]

Originally Posted by Dragoneye

...Yes. Because they only sold 29k. I don't really understand where this is going...


Take a chance on losing money by over-producing a car and then having to use incentives to sell them? This has been done before to utter failure, ask GM all about it...

There is a paradigm in place in Industry today called "Just In Time". You build a part, as demanded and ONLY to that level of demand. There is no surplus, there is no warehouse, and components built today will usually be used in production within a week or two.

This is the same concept applied to building cars, albeit I'm simplifing this because I'm far from an expert.

Say Chrysler builds...2000 Challengers In January. Lots are sold out...and back-orders are placed. So they raise output in February to 2300 to meet that demand. Back orders are still placed, but a cars lot life begins to grow. So now it becomes a balancing act...you can't go gung-ho and throw 3000 cars out in March because #1, the plant has a certain production limit they cannot exceed, and #2, those cars stand a darn good chance of sitting on the lots. So what do you do if #2 happens...scale back to 1700 cars in April to compensate? That means layoffs at the plant and back-orders increase substantially, pissing off customers.

this is why i like this forum....people who understand!