If this was applied at GM, it is likely that demand will further drop, with the company unable to honor orders for long periods of time.
Wal-Mart is a similar situation. Running out of a certain item on the shelves is less likely to cause a sudden demand in the Wal-Mart customers. However, a long waiting period for a car will certainly play worse on GM's company image.
Demand forecasting seems like a better fit inventory instrument. If the company would be able to evaluate both future potential demand, as well as the potential demand variation over the next period of time, then it is likely that it would also be able to better adapt its supply to match demand and avoid the type of inventory problems it is facing.
In this sense, it is more likely that the problem GM is facing is less one strictly tied to inventory, but more connected with their lack of capacity to stimulate demand for their cars. Once this is done, the company would be able to estimate the necessary supply and reduce production on stock.
Bibliography
1. Farago, Robert. General Motors Death Watch 108: Stuffed?...
January 2007. On the Internet at http://www.thetruthaboutcars.com/?p=3070.Last retrieved on August 21, 2007
2. Szczesny, Joseph. GM Shuts Plants to Reduce Inventory. On the Internet at http://www.thecarconnection.com/index.asp?article=8180.February 2005. Last retrieved on August 21, 2007
3. Byrnes, J. (2003, June 2). Dell Manages Profitability, Not Inventory. Harvard Business School Working Knowledge. Retrieved September 7, 2006 at http://hbswk.hbs.edu/item.jhtml?id=3497&t=dispatch
Farago, Robert. General Motors Death Watch 108: Stuffed? The Truth About Cars. January 2007. On the Internet at http://www.thetruthaboutcars.com/?p=3070.Last retrieved on August 21, 2007
Szczesny, Joseph. GM Shuts Plants to Reduce Inventory. On the Internet at http://www.thecarconnection.com/index.asp?article=8180.February 2005. Last retrieved on August 21, 2007
Byrnes, J. (2003, June 2). Dell Manages Profitability, Not Inventory. Harvard Business School Working Knowledge. Retrieved September 7, 2006 at http://hbswk.hbs.edu/item.jhtml?id=3497&t=dispatch
