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Simultaneous determination of inventories and accounts receivable

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  • Ayub Mehar

    (Management Sciences, Institute of Business and Technology (Biztek), Karachi, Pakistan)

Abstract

The study presents a model based on 3375 observations from industrial firms in Pakistan, and the three-stage least square (3SLS) technique has been applied for the estimation. The results indicate that the economic order quantity (EOQ) of inventories is not a constant magnitude; it is a variable closely associated with 'time trend'. While the 'buffer stock' element can be estimated through the constant term of an equation. Receivables from customers show a negative correlation with liquid assets and the cost of production. Receivables are also shown to act as substitute for closing inventories. Copyright © 2005 John Wiley & Sons, Ltd.

Suggested Citation

  • Ayub Mehar, 2005. "Simultaneous determination of inventories and accounts receivable," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 259-269.
  • Handle: RePEc:wly:mgtdec:v:26:y:2005:i:4:p:259-269
    DOI: 10.1002/mde.1221
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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