Relationships between inventory, sales and service in a retail chain store operation
International Journal of Physical Distribution & Logistics Management
ISSN: 0960-0035
Article publication date: 1 March 2001
Abstract
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.
Keywords
Citation
Dubelaar, C., Chow, G. and Larson, P.D. (2001), "Relationships between inventory, sales and service in a retail chain store operation", International Journal of Physical Distribution & Logistics Management, Vol. 31 No. 2, pp. 96-108. https://doi.org/10.1108/09600030110387480
Publisher
:MCB UP Ltd
Copyright © 2001, MCB UP Limited