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A Model of Dairy Product Inventory Behavior
Author(s) -
Miller Stephen E.
Publication year - 1994
Publication title -
applied economic perspectives and policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.4
H-Index - 49
eISSN - 2040-5804
pISSN - 2040-5790
DOI - 10.2307/1349703
Subject(s) - product (mathematics) , business , econometrics , economics , mathematics , geometry
This article tests the hypothesis that inventory behavior for American cheese, butter, and nonfat dry milk is consistent with dynamic cost minimization by dairy manufacturers. Results indicate that firms choose their dairy product inventories so as to minimize quadratic output and inventory carrying costs, subject to autoregressive cost shocks. There appears to be relatively rapid adjustment of commercial dairy product stocks to desired levels, with 95 percent of that adjustment taking place within six months.