Inventory management and firm performance in wholesale and retail trade

Abstract

Inventory management is an indispensable element of the firm's operational efficiency that determines the results of its activity and its long-term performance. The present study aims to analyze the influence of efficient inventory management on the performance of firms in the Wholesale and Retail trade sector, trying to isolate this relationship in order to bring out as many peculiarities as possible. In order to achieve the aim, fixed effects panel linear regression analysis was undertaken, applying the least squares dummy variables method. The regression models were constructed separately for the dependent variables of Gross Margin and Gross operating surplus as proxies for performance, and separately for the three datasets: Wholesale and Retail trade, Wholesale trade and Retail trade. The results of the analysis reveal the existence of significant relationships between inventory management and firm performance. The significant relationships identified did not confirm the expectations, although were validated by previous results identified in the literature.

Keywords

• inventory
• inventory management
• firm performance
• wholesale and retail trade
• fixed effects panel linear regression