Inventory Management Behavior of American and Japanese Firms

Posted: 28 May 2013 Last revised: 30 May 2013

See all articles by Alice Orcutt Nakamura

Alice Orcutt Nakamura

University of Alberta - School of Business

Masao Nakamura

University of British Columbia (UBC) - Sauder School of Business

Date Written: September 24, 1988

Abstract

Firms view inventory/sales ratios as main decision variables. These ratios are also important in forecasting business activity. Understanding these ratios seems particularly relevant since many U.S. firms are beginning to implement the “just-in-time” production and inventory system that some see as the key to the typically lower inventory/sales ratios of Japanese firms. In this paper we present a partial adjustment model which can empirically characterize differences in the inventory behavior of U.S. and Japanese firms. Two key parameters estimated are the desired inventory/sales ratio and the speed of adjustment of the actual to the desired inventory/sales ratio. We find that Japanese firms in many industries have lower desired inventory/sales ratios and higher speeds of adjustment than U.S. firms. Simulation analyses are used to validate key assumptions of our model.

Suggested Citation

Nakamura, Alice Orcutt and Nakamura, Masao, Inventory Management Behavior of American and Japanese Firms (September 24, 1988). Journal of Japanese and International Economies, Vol. 3, No. 3, 1989, University of Alberta School of Business Research Paper No. 2013-272, Available at SSRN: https://ssrn.com/abstract=2270777

Alice Orcutt Nakamura (Contact Author)

University of Alberta - School of Business ( email )

2-32C Business Building
Edmonton, Alberta T6G 2R6
Canada

Masao Nakamura

University of British Columbia (UBC) - Sauder School of Business ( email )

2053 Main Mall
Vancouver, BC V6T 1Z2
Canada
604-822-8434 (Phone)
604-822-8477 (Fax)

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