IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v133y2011i1p143-153.html
   My bibliography  Save this article

An empirical analysis of inventory turnover behaviour in Greek retail sector: 2000-2005

Author

Listed:
  • Kolias, Georgios D.
  • Dimelis, Sophia P.
  • Filios, Vasilios P.

Abstract

In this study we investigate the determinants of inventory turnover. The study is based on an econometric analysis of inventory behaviour using an inventory turnover model. The empirical implementation of the model was conducted on a sample of financial data for 566 Greek retail firms for the period 2000-2005. By employing panel data techniques it was found that inventory turnover ratio is negatively correlated with gross margin and positively correlated with capital intensity and a measure of sales surprise. Decomposing the variance into its components associated with year, firm and retail segment effects, we found that a substantial amount of inventory turns variability is due to segment-wise effects. Moreover, the inventory turnover reaction to different sales changes was also studied. It was estimated that changes in sales bring on bigger changes when firms operate in sales-declined region. These results are useful in identifying methods and applications to improve inventory performance among firms and over time.

Suggested Citation

  • Kolias, Georgios D. & Dimelis, Sophia P. & Filios, Vasilios P., 2011. "An empirical analysis of inventory turnover behaviour in Greek retail sector: 2000-2005," International Journal of Production Economics, Elsevier, vol. 133(1), pages 143-153, September.
    • Handle: RePEc:eee:proeco:v:133:y:2011:i:1:p:143-153
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925527310001477
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Fitzsimons, Gavan J, 2000. "Consumer Response to Stockouts," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 27(2), pages 249-266, September.
    2. Alan S. Blinder & Louis J. Maccini, 1991. "Taking Stock: A Critical Assessment of Recent Research on Inventories," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 73-96, Winter.
    3. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 38(2), pages 112-134.
    4. Blinder, Alan S, 1981. "Inventories and the Structure of Macro Models," American Economic Review, American Economic Association, vol. 71(2), pages 11-16, May.
    5. James A. Kahn, 1992. "Why is Production More Volatile than Sales? Theory and Evidence on the Stockout-Avoidance Motive for Inventory-Holding," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 481-510.
    6. James A. Kahn & Mark Bils, 2000. "What Inventory Behavior Tells Us about Business Cycles," American Economic Review, American Economic Association, vol. 90(3), pages 458-481, June.
    7. Eugene W. Anderson & Mary W. Sullivan, 1993. "The Antecedents and Consequences of Customer Satisfaction for Firms," Marketing Science, INFORMS, vol. 12(2), pages 125-143.
    8. Sunder Kekre & Kannan Srinivasan, 1990. "Broader Product Line: A Necessity to Achieve Success?," Management Science, INFORMS, vol. 36(10), pages 1216-1232, October.
    9. Dimitrios P. Koumanakos, 2008. "The effect of inventory management on firm performance," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 57(5), pages 355-369, June.
    10. Vishal Gaur & Marshall L. Fisher & Ananth Raman, 2005. "An Econometric Analysis of Inventory Turnover Performance in Retail Services," Management Science, INFORMS, vol. 51(2), pages 181-194, February.
    11. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-351, June.
    12. Sergey Rumyantsev & Serguei Netessine, 2007. "What Can Be Learned from Classical Inventory Models? A Cross-Industry Exploratory Investigation," Manufacturing & Service Operations Management, INFORMS, vol. 9(4), pages 409-429, April.
    13. Gabriel Hawawini & Venkat Subramanian & Paul Verdin, 2003. "Is performance driven by industry‐or firm‐specific factors? A new look at the evidence," Strategic Management Journal, Wiley Blackwell, vol. 24(1), pages 1-16, January.
    14. William J. Baumol & Edward A. Ide, 1956. "Variety in Retailing," Management Science, INFORMS, vol. 3(1), pages 93-101, October.
    15. Anita M. McGahan & Michael E. Porter, 2002. "What Do We Know About Variance in Accounting Profitability?," Management Science, INFORMS, vol. 48(7), pages 834-851, July.
    16. Garrett van Ryzin & Siddharth Mahajan, 1999. "On the Relationship Between Inventory Costs and Variety Benefits in Retail Assortments," Management Science, INFORMS, vol. 45(11), pages 1496-1509, November.
    17. Yiannis E. Spanos & George Zaralis & Spyros Lioukas, 2004. "Strategy and industry effects on profitability: evidence from Greece," Strategic Management Journal, Wiley Blackwell, vol. 25(2), pages 139-165, February.
    18. Pashigian, B Peter, 1988. "Demand Uncertainty and Sales: A Study of Fashion and Markdown Pricin g," American Economic Review, American Economic Association, vol. 78(5), pages 936-953, December.
    19. ANITA M. McGAHAN & MICHAEL E. PORTER, 1997. "How Much Does Industry Matter, Really?," Strategic Management Journal, Wiley Blackwell, vol. 18(S1), pages 15-30, July.
    20. Wernerfelt, Birger & Montgomery, Cynthia A, 1988. "Tobin's q and the Importance of Focus in Firm Performance," American Economic Review, American Economic Association, vol. 78(1), pages 246-250, March.
    21. Sea‐Jin Chang & Harbir Singh, 2000. "Corporate and industry effects on business unit competitive position," Strategic Management Journal, Wiley Blackwell, vol. 21(7), pages 739-752, July.
    22. Paul Gompers & Josh Lerner & David Scharfstein, 2005. "Entrepreneurial Spawning: Public Corporations and the Genesis of New Ventures, 1986 to 1999," Journal of Finance, American Finance Association, vol. 60(2), pages 577-614, April.
    23. Cannon, Alan R., 2008. "Inventory improvement and financial performance," International Journal of Production Economics, Elsevier, vol. 115(2), pages 581-593, October.
    24. Bauer, Paul W., 1990. "Recent developments in the econometric estimation of frontiers," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 39-56.
    25. Richard P. Rumelt, 1991. "How much does industry matter?," Strategic Management Journal, Wiley Blackwell, vol. 12(3), pages 167-185, March.
    26. S. Rajagopalan & Arvind Malhotra, 2001. "Have U.S. Manufacturing Inventories Really Decreased? An Empirical Study," Manufacturing & Service Operations Management, INFORMS, vol. 3(1), pages 14-24, June.
    27. Kelvin Lancaster, 1990. "The Economics of Product Variety: A Survey," Marketing Science, INFORMS, vol. 9(3), pages 189-206.
    28. Yelland, Phillip M., 2006. "Stable seasonal pattern models for forecast revision: A comparative study," International Journal of Forecasting, Elsevier, vol. 22(4), pages 799-818.
    29. Robin M. Hogarth & Spyros Makridakis, 1981. "Forecasting and Planning: An Evaluation," Management Science, INFORMS, vol. 27(2), pages 115-138, February.
    30. Dimelis, Sophia P. & Lyriotaki, Maria-Niki, 2007. "Inventory investment and foreign ownership in Greek manufacturing firms," International Journal of Production Economics, Elsevier, vol. 108(1-2), pages 8-14, July.
    31. Vastag, Gyula & Clay Whybark, D., 2005. "Inventory management: Is there a knock-on effect?," International Journal of Production Economics, Elsevier, vol. 93(1), pages 129-138, January.
    32. Geurts, Michael D. & Patrick Kelly, J., 1986. "Forecasting retail sales using alternative models," International Journal of Forecasting, Elsevier, vol. 2(3), pages 261-272.
    33. Andrei Shleifer, 1985. "A Theory of Yardstick Competition," RAND Journal of Economics, The RAND Corporation, vol. 16(3), pages 319-327, Autumn.
    34. Makridakis, Spyros, 1986. "The art and science of forecasting An assessment and future directions," International Journal of Forecasting, Elsevier, vol. 2(1), pages 15-39.
    35. Gérard P. Cachon & Marshall Fisher, 2000. "Supply Chain Inventory Management and the Value of Shared Information," Management Science, INFORMS, vol. 46(8), pages 1032-1048, August.
    36. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
    37. Hong Chen & Murray Z. Frank & Owen Q. Wu, 2005. "What Actually Happened to the Inventories of American Companies Between 1981 and 2000?," Management Science, INFORMS, vol. 51(7), pages 1015-1031, July.
    38. Theodore H. Clark & Janice H. Hammond, 1997. "Reengineering Channel Reordering Processes To Improve Total Supply‐Chain Performance," Production and Operations Management, Production and Operations Management Society, vol. 6(3), pages 248-265, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fang, Yuan & Zhou, Qian & Jiang, Xiandeng & Li, Chao, 2024. "Unlocking the potential of inventory management: Integrating digital transformation with firm practices," Economic Modelling, Elsevier, vol. 139(C).
    2. Elsayed, Khaled & Wahba, Hayam, 2013. "Reinvestigating the relationship between ownership structure and inventory management: A corporate governanceperspective," International Journal of Production Economics, Elsevier, vol. 143(1), pages 207-218.
    3. Miftah Zikri & Syed Shams & Afzalur Rashid & Chandrasekhar Krishnamurti, 2024. "Does size matter? Examining the probability of firm emergence from bankruptcy," International Review of Finance, International Review of Finance Ltd., vol. 24(4), pages 669-713, December.
    4. Feng, Cong & Fay, Scott, 2021. "Chief stores officer and retailer performance," Journal of Retailing and Consumer Services, Elsevier, vol. 58(C).
    5. Robb, David J. & Liu, Fei & Lai, Richard & Ren, Z. Justin, 2012. "Inventory in mainland China: Historical, industry, and geographic perspectives," International Journal of Production Economics, Elsevier, vol. 135(1), pages 440-450.
    6. Cho, Woohyun & Min, Dong-Jun, 2018. "Longitudinal examination of passenger characteristics among airline types in the US," Journal of Air Transport Management, Elsevier, vol. 72(C), pages 11-19.
    7. Feng, Cong & Xiang, Kexin, 2023. "Structural power of female executives and retailer profitability: A contingent resource-based perspective," Journal of Business Research, Elsevier, vol. 168(C).
    8. Manikas, Andrew S. & Patel, Pankaj C., 2016. "Managing sales surprise: The role of operational slack and volume flexibility," International Journal of Production Economics, Elsevier, vol. 179(C), pages 101-116.
    9. Dong, Kaiqiang & Sun, Wei, 2022. "Would the market mechanism cause the formation of overcapacity?: Evidence from Chinese listed firms of manufacturing industry," International Review of Economics & Finance, Elsevier, vol. 79(C), pages 97-113.
    10. Folinas, Dimitris & Shen, Chia-Yi, 2014. "Exploring Links among Inventory and Financial Performance in the Agricultural Machinery," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 2(4), pages 1-12, October.
    11. Brandenburg, Marcus, 2016. "Supply chain efficiency, value creation and the economic crisis – An empirical assessment of the European automotive industry 2002–2010," International Journal of Production Economics, Elsevier, vol. 171(P3), pages 321-335.
    12. Zbigniew Golas, 2020. "Does Inventory Management Improve Profitability? Empirical Evidence from Polish Manufacturing Industries," European Research Studies Journal, European Research Studies Journal, vol. 0(Special 2), pages 939-961.
    13. LUKIĆ Radojko, 2023. "Influence of Net Working Capital on Trade Profitability in Serbia," European Journal of Interdisciplinary Studies, Bucharest Economic Academy, issue 01, March.
    14. Benjamin Melamed & Rudolf Leuschner & Weiwei Chen & Dale S. Rogers & Min Cao, 2022. "Inventory turns and finite-horizon Little’s Laws," Annals of Operations Research, Springer, vol. 317(1), pages 129-146, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vishal Gaur & Marshall L. Fisher & Ananth Raman, 2005. "An Econometric Analysis of Inventory Turnover Performance in Retail Services," Management Science, INFORMS, vol. 51(2), pages 181-194, February.
    2. Kohls, Tobias & Mager, Ferdinand & Regele, Tobias, 2023. "Competitive advantage and firm, industry, and country effects: An asset pricing perspective," Journal of Economics and Business, Elsevier, vol. 127(C).
    3. Cannon, Alan R., 2008. "Inventory improvement and financial performance," International Journal of Production Economics, Elsevier, vol. 115(2), pages 581-593, October.
    4. Julia, 2011. "About some difficulties with interpreting and measuring corporate performance," Bank i Kredyt, Narodowy Bank Polski, vol. 42(5), pages 41-60.
    5. Weiß, Christian, 2010. "The Ownership Concentration of Firms: Three Essays on the Determinants and Effects," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 30247.
    6. André Ribeiro Gonçalves & Rogério H Quintella, 2006. "The role of internal and external factors in the performance of brazilian companies and its evolution between 1990 and 2003," RAC - Revista de Administração Contemporânea (Journal of Contemporary Administration), ANPAD - Associação Nacional de Pós-Graduação e Pesquisa em Administração, vol. 10(spe), pages 117-136.
    7. Andonova, Veneta & Ruíz-Pava, Guillermo, 2016. "The role of industry factors and intangible assets in company performance in Colombia," Journal of Business Research, Elsevier, vol. 69(10), pages 4377-4384.
    8. Goddard, John & Tavakoli, Manouche & Wilson, John O.S., 2009. "Sources of variation in firm profitability and growth," Journal of Business Research, Elsevier, vol. 62(4), pages 495-508, April.
    9. Galbreath, Jeremy & Galvin, Peter, 2008. "Firm factors, industry structure and performance variation: New empirical evidence to a classic debate," Journal of Business Research, Elsevier, vol. 61(2), pages 109-117, February.
    10. Lai, Richard, 2007. "Inventory and the Shape of the Earth," MPRA Paper 4754, University Library of Munich, Germany.
    11. Muhammad Azeem Qureshi & Fred H. Strønen & Marius Tyseng & Marius Urdal, 2020. "Sustainable Business in Norway: The Firm or the Industry Effect?," Sustainability, MDPI, vol. 12(8), pages 1-13, April.
    12. K. O’Shaughnessy & Eric Gedajlovic & Patrick Reinmoeller, 2007. "The influence of firm, industry and network on the corporate social performance of Japanese firms," Asia Pacific Journal of Management, Springer, vol. 24(3), pages 283-303, September.
    13. Chen, Yi-Min, 2010. "The continuing debate on firm performance: A multilevel approach to the IT sectors of Taiwan and South Korea," Journal of Business Research, Elsevier, vol. 63(5), pages 471-478, May.
    14. Robb, David J. & Liu, Fei & Lai, Richard & Ren, Z. Justin, 2012. "Inventory in mainland China: Historical, industry, and geographic perspectives," International Journal of Production Economics, Elsevier, vol. 135(1), pages 440-450.
    15. Ketelhöhn, Niels W. & Quintanilla, Carlos, 2012. "Country effects on profitability: A multilevel approach using a sample of Central American firms," Journal of Business Research, Elsevier, vol. 65(12), pages 1767-1772.
    16. Pankaj Kumar & Xiaojin Liu & Akbar Zaheer, 2022. "How much does the firm's alliance network matter?," Strategic Management Journal, Wiley Blackwell, vol. 43(8), pages 1433-1468, August.
    17. Vicente López-López & Susana Iglesias-Antelo & Esteban Fernández, 2020. "Is Sustainable Performance Explained by Firm Effect in Small Business?," Sustainability, MDPI, vol. 12(23), pages 1-13, December.
    18. Sergey Rumyantsev & Serguei Netessine, 2007. "What Can Be Learned from Classical Inventory Models? A Cross-Industry Exploratory Investigation," Manufacturing & Service Operations Management, INFORMS, vol. 9(4), pages 409-429, April.
    19. Spyridon Stavropoulos & Martijn J. Burger & Dimitris Skuras, 2015. "Data Sparseness and Variance in Accounting Profitability," Tinbergen Institute Discussion Papers 15-014/VII, Tinbergen Institute.
    20. Wan, Xiang & Britto, Rodrigo & Zhou, Zenan, 2020. "In search of the negative relationship between product variety and inventory turnover," International Journal of Production Economics, Elsevier, vol. 222(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:133:y:2011:i:1:p:143-153. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.