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Input and output inventories

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  • Humphreys, Brad R.
  • Maccini, Louis J.
  • Schuh, Scott

Abstract

This paper presents a new stage-of-fabrication inventory model with ordering usage and stocking of input materials under gross production or value added technology The model extends the traditional linear-quadratic model of output (finished goods) inventories and yields joint decision rules for input and output inventories with extensive dynamic stage-of-fabrication linkages Data show that input inventories are more important than output inventories in business cycle fluctuations Maximum likelihood estimation is relatively successful for a structural inventory model in nondurable and durable good industries The results include evidence of convex costs input-inventory-saving technology and insensitivity to production technology specification
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  • Humphreys, Brad R. & Maccini, Louis J. & Schuh, Scott, 2001. "Input and output inventories," Journal of Monetary Economics, Elsevier, vol. 47(2), pages 347-375, April.
    • Handle: RePEc:eee:moneco:v:47:y:2001:i:2:p:347-375
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