What actually happened to the inventories of American companies between 1981 and 2000?

Hong Chen, Murray Z. Frank, Owen Q. Wu

Research output: Contribution to journalReview articlepeer-review

175 Scopus citations

Abstract

This paper examines the inventories of publicly traded American manufacturing companies between 1981 and 2000. The median of inventory holding periods were reduced from 96 days to 81 days. The average rate of inventory reduction is about 2% per year. The greatest reduction was found for work-in-process inventory, which declined by about 6% per year. Finished-goods inventories did not decline. Firms with abnormally high inventories have abnormally poor long-term stock returns. Firms with slightly lower than average inventories have good stock returns, but firms with the lowest inventories have only ordinary returns.

Original languageEnglish (US)
Pages (from-to)1015-1031
Number of pages17
JournalManagement Science
Volume51
Issue number7
DOIs
StatePublished - Jul 2005

Keywords

  • Iventory
  • Just in time
  • Manufacturing
  • Supply chain

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