A Review of Inventory Investment: The Macro and Micro Perspective

Abstract

This article combed the domestic and foreign researches on inventory investment since 1990. We find that researches mainly focus on the macro level of the relationship between inventory investment and business cycle, the effects of inflation or interest rates on inventory adjustment. While in the micro enterprise level, they study the determiners of inventory investment, including financing constraints, size and location. Besides, the role of inventory investment behavior on corporate performance has not yet reached a consensus. Based on the analysis of the existing literatures, we put forward the possible directions for future research in the field of inventory investment, combining with China's specific conditions.

Low interest rate environment: inventory management in Finland and Baltic states

“…Typically, all of these measures in low performing companies are having worsening development, or alternatively they do not improve at all. In both cases of Finland and Baltic states, these low performing companies are small- and medium-sized (and are often experiencing some growth challenges; SMEs are generally regarded to be inefficient in inventory management within previous studies too, see Huang, 2016). Profitability and operative cash flow could be problematic in these companies, but not necessarily.…”

“…Using second hand data and analyzing it using statistical techniques is often used research method in larger inventory efficiency studies (e.g. Bendig et al , 2018; Jain et al , 2014; Huang, 2016; Kesavan et al , 2010; Steinker; Hoberg, 2013). What is different in this study is the data gathering approach, which has been manual and directly from data sources (and not from databases).…”

“…Eroglu and Hofer (2011) in turn argue that inventory turns and efficiency improvement are beneficial to some level, but thereafter performance will start to deteriorate (following concave function). Huang (2016) argues that there already exists macroeconomic research, which shows that low interest rates will lead to higher inventory holdings. Together with low interest rates, inventories are driven by inflation development (Huang, 2016).…”

“…Huang (2016) argues that there already exists macroeconomic research, which shows that low interest rates will lead to higher inventory holdings. Together with low interest rates, inventories are driven by inflation development (Huang, 2016).…”

The Role of Inventory Investment Practices on Innovation Performance of Agricultural Based Institutions

“…The incapacity to relate investment in inventory to the cost of capital is perplexing given the importance of inventory investment over the business cycle. The characteristics of inventory investment varies across countries, periods, cyclical frequencies, industries and components including raw material, work-in-progress and finished goods (Huang J. , 2016) By utilizing new, flexible, and more refined tools that provide for dynamic optimization of inventories to maximize customer service, throughput, and market share, while decreasing inventory investment and lowering costs, inventory managers can significantly impact overall competitiveness and profitability (Muller, 2019).…”