Econometrica: Apr 1957, Volume 25, Issue 2

The Theory of Inventory Decisions

https://doi.org/0012-9682(195704)25:2<222:TTOID>2.0.CO;2-T
p. 222-238

Edwin S. Mills

This article is an attempt to determine whether firms can be assumed to behave as if they were using a rational inventory policy. A decision rule is deduced from a plausible model of a firm's cost structure and an attempt is made to see whether historical time series of firms' production, sales, and inventory data can be explained by such a decision rule.

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