Regional Variations in Manufacturing Inventory Levels

The extent to which the ratio of inventory to value added for manufacturing industry varies between regions in the UK is examined. An analysis of regionally disaggregated inventory data obtained from the British Census of Production reveals wide regional variations in this ratio, with the three most peripheral regions being significantly overstocked relative to the national average. Stock levels in one of these regions, Scotland, are examined in detail in an effort to identify possible causes of the overstocking. Industrial structure and length of supply line appear not to be important factors. As much of the excess inventory is in the work‐in‐progress category, the overstocking is largely intrinsic to the production operation.