Factors Associated with Production Input Difference of a Manufacturing Plant in Sri Lanka: A Case Study

Abstract

Abstract The supply chain is a system of organizations, peoples, activities, information, and resources involved in moving a product or service from supplier to customer. As the whole supply chain is linked together, any inconsistency in one link can badly affect the overall supply chain. Each organization in the supply chain has its own internal individual supply chains. The internal supply chain is mainly based on the production demand and material supply to the production. Any inconsistency between the demand and the supply, directly affects the status of internal supply chain. Only few studies have been done on internal supply demand variance, and this study is one of the few approaches into this area. The main objective of this study is to identify the factors associated with production input difference of a manufacturing plant. This is an explanatory research, which is done using appropriate sampling methods and Vector Auto regressive (VAR) modeling. Eviews (7.0.0.1) version is used to analyze the data. First of all the data has been checked for stationary property and the related lag length has been selected. Then the VAR modeling techniques has been applied and later the diagnostic tests have been performed on the resulted models. In briefing the results, it is stated that style of the product (Style) does not impact the input variance models or downtime models. Considering input variance models, it is found that downtime at lag 1 does not have any impact on the input variance. Furthermore, the previous day input variance has a significant impact to the next day input variance. The style and previous day downtime influence the demand variance only in special cases. As heteroskedasticity is present in some of the models, exponential & power transformations have been done in order to avoid heteroskedasticity. But the results do not dramatically change due to transformations. Keywords: Factors, Internal Supply Chain, Manufacturing Plant, Vector Auto Regressive