If you need an accessible version of this item please contact JSTOR User Support

Inventories and the Volatility of Production

James A. Kahn
The American Economic Review
Vol. 77, No. 4 (Sep., 1987), pp. 667-679
Stable URL: http://www.jstor.org/stable/1814538
Page Count: 13
  • Download PDF
  • Cite this Item

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If you need an accessible version of this item please contact JSTOR User Support
Inventories and the Volatility of Production
Preview not available

Abstract

A stylized fact associated with inventory behavior is that the variance of production exceeds the variance of sales. This paper presents a model of production decisions with demand uncertainty that incorporates nonnegativity constraints on inventories. Even with no productivity shocks, optimal behavior by the firm is consistent with this stylized fact, either if demand exhibits positive serial correlation, or if the firm can backlog excess demand.

Page Thumbnails

  • Thumbnail: Page 
667
    667
  • Thumbnail: Page 
668
    668
  • Thumbnail: Page 
669
    669
  • Thumbnail: Page 
670
    670
  • Thumbnail: Page 
671
    671
  • Thumbnail: Page 
672
    672
  • Thumbnail: Page 
673
    673
  • Thumbnail: Page 
674
    674
  • Thumbnail: Page 
675
    675
  • Thumbnail: Page 
676
    676
  • Thumbnail: Page 
677
    677
  • Thumbnail: Page 
678
    678
  • Thumbnail: Page 
679
    679