Differences in Retail Inventory Investment Behavior During Macroeconomic Shocks: Role of Service Level

• 成果类型: Article
• 署名作者: Kesavan, Saravanan; Kushwaha, Tarun
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.12048
• 发表日期: 2014
• 页码: 2118-2136
• 关键词: Inventory investment; macroeconomic shocks; expansion; contraction; inventory holding cost; stockout cost; service level

摘要

In this article, we analyze how retailers change their inventory investment behavior in response to macroeconomic shocks. We examine if service level, as measured by the ratio of stockout to inventory holding costs, can explain the differences in observed behavior across retailers. We use data on macroeconomic indicators and quarterly filings of US public retailers from 1985 to 2009 to estimate a dynamic model of short- and long-term impact of macroeconomic shocks on inventory investment. Our results show that retailers with a high service level increase their inventory investment significantly more than those with a low service level during expansion shocks. Conversely, retailers with a low service level curtail their inventory investment significantly more than those with a high service level during periods of economic contractions. Thus, we show that the aggregate change in inventory investment documented in prior macroeconomics research is driven by different sets of retailers, as predicted by newsvendor logic. We draw implications of our findings to retailers as well as their suppliers.