Essays in just-in-time manufacturing: Firm value, product variety, and supplier coordination

Over the last decade new manufacturing methods and techniques have focused on reducing waste in production tasks. Just-In-Time (JIT) manufacturing is one of the most popular new technologies adopted. This dissertation describes the impact of Just-In-Time manufacturing on firm value, product variety and supplier coordination. It consists of three essays that illustrate both empirical findings and theoretical results.;The first essay measures the impact of Just-In-Time manufacturing on accounting measures of performance. The empirical methodology, simultaneous equation estimation, allows the isolation of the effect of JIT on various accounting measures. Results show that post-adoption, JIT had a positive effect on earnings, even though firms experienced a decline in earnings.;The second essay models a manufacturing facility that supplies a product market consisting of consumers with heterogeneous tastes. I show that setup time reduction enables a firm to offer greater product variety, due to a reduction in the diseconomies of scope that arise from setups. Moreover, by offering greater variety a manufacturer is able to charge higher prices and increase revenues even though volume per product declines. I also show that quality improvements lead to greater variety because of increasing the economies of scale at the facility. In this essay I also study a supplier's reaction to the manufacturer's product variety decision. If the supplier experiences an increase in part variety, due to the manufacturer's increase in product variety, he has a disincentive to reduce setup time. To create an incentive to reduce setup time, the manufacturer must insulate the supplier from increases in product variety.;The final essay studies the post-JIT performance of US manufacturers and empirically validates some of the theoretical findings. A survey of 108 US manufacturing facilities show that, post-adoption, plants produced a greater variety of products facilitated by setup time reduction and the use of complementary technologies. Manufacturers also reduced the number of vendors significantly. The relative magnitude of changes or gains, however, depends on the relative position of a facility in the value chain. I find that downstream facilities, that are closer to consumers, experience greater gains than their upstream counterparts.