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Simultaneous Determination Of Inventories And Accounts Receivable

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Abstract

The study presents a model based on 3,375 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.

Suggested Citation

  • Ayub, Mehar, 2001. "Simultaneous Determination Of Inventories And Accounts Receivable," MPRA Paper 361, University Library of Munich, Germany, revised 2002.
  • Handle: RePEc:pra:mprapa:361
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    More about this item

    Keywords

    3SLS; Inventory Control; Economic Order Quantity; Buffer Stock;
    All these keywords.

    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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