Frequently manufacturers of industrial products sold through a channel of distribution maintain large finished goods inventories. On the average, these inventories amount to 23% of a firm's current assets. The situation can also be expressed as an average one month supply of product available for sale. This may understate the problem. Some firms have as much as 52% of their current assets invested in finished goods inventory. In the firm studied here, the average inventory was 37% of current assets and a related three months of supply. But some items had as many as several hundred months of supply. But some items had as many as several hundred months worth of inventory on hand. The research reported here hypothesizes two structural equation models in order more clearly to understand the causes of finished goods inventory imbalances. The model is tested and coefficients are estimated based on actual conditions prevailing at a large Fortune 500 firm.