PRODUCTIVITY-MEASUREMENT FOR A DISTRIBUTION FIRM

The paper derives a consistent accounting framework for the treatment of inventories when measuring the productivity of a distribution firm. The average purchase price of an inventory item during an accounting period must be distinguished from its average selling price and these two average prices should be distinguished from the corresponding bala nce sheet prices. The accounting framework is implemented for a distri bution firm which sold 76,000 separate items. The firm achieved a 9.6 percent per quarter total factor productivity growth rate over 6 quart ers.