This article analyzes a continuous time back-ordered inventory system with stochastic demand and stochastic delivery lags for placed orders. This problem in general has an infinite dimensional state space and is hence intractable. We first obtain the set of minimal conditions for reducing such a...

This paper presents and applies a stage-of-fabrication inventory model to the UK manufacturing sector. The model emphasises the interaction between input (raw materials and work-in-process) and output (finished goods) inventories. This interaction is an important empirical regularity and proves...

In this paper we present an approximation method to compute the reorder point s in a (R; s; Q) inventory model with a service level restriction, where demand is modeled as a compound Bernoulli process; that is, with a xed probability there is positive demand during a time unit, otherwise demand...

We review and interpret recent work on inventories, emphasizing empirical and business cycle aspects. We begin by documenting two empirical regularities about inventories. The first is the well-known one that inventories move procyclically. The second is that inventory movements are quite...

Motivated by the contrasting strategic choices made by two divisions of 7-Eleven regarding the risk ownership of excess inventory, our research aims to understand the drivers of the choice between consignment and retail ownership of inventory and to develop rules of thumb for determining what...

We study the aggregate implications of (S,s) inventory policies in a dynamic general equilibrium model with aggregate uncertainty. Firms in the model's retail sector face idiosyncratic demand risk, and (S,s) inventory policies are optimal because of fixed order costs. The distribution of...

We estimate a DSGE model with (S,s) inventory policies. We find that (i) taking inventories into account can significantly improve the empirical fit of DSGE models in matching the standard business-cycle moments (in addition to explaining inventory fluctuations); (ii) (S,s) inventory policies...

Time-to-build, time-to-produce, and inventory have important implications for asset prices and quantity dynamics in a general equilibrium model with recursive preferences. Time-to-build captures the delay in transforming new investments into productive capital, and time-to-produce captures the...