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Relationships between inventory, sales and service in a retail chain store operation

journal contribution
posted on 01.01.2001, 00:00 authored by Chris DubelaarChris Dubelaar, G Chow, P D Larson
Effective inventory management is critical to retailing success. Surprisingly, there is
little published empirical research examining relationships between retail inventory, sales and
customer service. Based on a survey of 101 chain store units, this paper develops and tests a
series of hypotheses about retail inventory. Seventy-five percent of the store owners/managers
responded to the mail survey. As expected, significant positive relationships were found between
inventory, service and sales. Specifically, support was found for the theory that inventory is a
function of the square root of sales. Also, greater product variety leads to higher inventory, and
service level is an exponential function of inventory. Finally, demand uncertainty was found to
have no apparent effect on inventory levels.

History

Journal

International journal of physical distribution & logistics management

Volume

31

Issue

2

Pagination

96 - 108

Publisher

Emerald Group Publishing

Location

Bingley, Eng.

ISSN

0960-0035

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Copyright notice

2001, Emerald Group Publishing

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