Title: Trend breaks in Finnish inventory intensities: a small open economy perspective

Authors: Heli Arminen; Kalevi Kyläheiko; Maija Hujala

Addresses: School of Business, Lappeenranta University of Technology, P.O. Box 20, 53851 Lappeenranta, Finland. ' School of Business, Lappeenranta University of Technology, P.O. Box 20, 53851 Lappeenranta, Finland. ' School of Business, Lappeenranta University of Technology, P.O. Box 20, 53851 Lappeenranta, Finland

Abstract: In this paper, we analyse econometrically the Finnish inventory to value added ratios (i.e., inventory intensities) within manufacturing and two subcategories, the wood and paper industry and manufacture of electrical products. The focus is on the period 1980-2009. In addition to revealing the statistically significant break points in the inventory intensity, we estimate the numbers, timings and magnitudes of the structural breaks. After determining the break points, we connect them to transaction, buffering and speculative motives for holding inventories. The properties of the break points observed suggest that the motives continue to play a role in modern small open economies and, therefore, they can be utilised by managers when trying to forecast the behaviour of inventories.

Keywords: inventory intensities; structural breaks; break point estimation; break points; inventory holding motives; manufacturing sector; wood industry; paper industry; electrical products; trend breaks; Finland; holding inventories; small economies; open economies; econometric analysis; value added ratios; statistical significance; transaction motives; buffering motives; speculative motives; managers; forecasting; inventory behaviour; logistics systems; logistics management.

DOI: 10.1504/IJLSM.2012.050157

International Journal of Logistics Systems and Management, 2012 Vol.13 No.4, pp.440 - 457

Published online: 10 Dec 2014 *

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