✍ Scribed by Albert A Hirsch
No coin nor oath required. For personal study only.
This paper examines the seeming eradication of evidence for improved inventory management since the early 1980s suggested by the aggregate data in the January 1993 revision of the Bureau of Economic Analysis' inventory and sales estimates for US manufacturing and trade. It analyzes inventory-sales (output, orders) ratios at the published level of detail to determine whether at least some components continue to show clear evidence of increased long-run efficiency after 1982. Further, it investigates three other potential avenues of improved inventory management:
greater "cyclical flexibility" (adjusting of inventory levels more fully to cyclical peaks and troughs); faster adjustment to near-term desired levels; and diminished buffer stock behavior. For each aspect and each inventory component, several indicators are examined (jointly) to assess the evidence for improved management. The incidence of positive assessments is then viewed across components to judge their overall role. Substantial evidence for improved long-run efficiency is largely confined to materials and work-in-process inventories in certain manufacturing industries: rising inventory-sales ratios for other components, centered in retail trade, are offsetting elements. Significantly greater cyclical flexibility and faster speeds of adjustment are more widespread, although again centered in manufacturing.
There is virtually no evidence of diminished buffer stock behavior.
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