SIMULTANEOUS DETERMINATION OF INVENTORIES AND ACCOUNTS RECEIVABLE

Muhammad Ayub Mehar

MPRA Paper from University Library of Munich, Germany

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.

Keywords: 3SLS; Inventory Control; Economic Order Quantity; Buffer Stock (search for similar items in EconPapers)
JEL-codes: G31 M41 (search for similar items in EconPapers)
Date: 2001, Revised 2002
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Published in Managerial and Decision Economics (2005): pp. 259-269

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Journal Article: Simultaneous determination of inventories and accounts receivable (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:361

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