Which of the following statements regarding inventory are incorrect?
1)Other than the cost, holding inventory is good for operations.
2)Inventories account for between 60 and 80 percent of a typical industrial firm's assets
3)WIP inventory is an acronym for work in process inventories.
4)Safety stock is held to maintain a certain level of service regardless of uncertainty

Question

Quizplus · Accepted Answer

Statement 2 is incorrect because inventories typically do not account for between 60 and 80 percent of a typical industrial firm's assets; this percentage is usually much lower. Statements 1, 3, and 4 are generally correct regarding inventory management principles. Holding inventory can have downsides such as costs, but it can be operationally beneficial. WIP indeed stands for work in process inventories, and safety stock is held to buffer against uncertainty.

Which of the Following Statements Regarding Inventory Are Incorrect