Council of Supply Chain Management Professionals (CSCMP) Practice Exam 2025 - Free CSCMP Practice Questions and Study Guide

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What aspect of inventory is typically true over time?

Inventory increases in value

Inventory remains stable in value

Inventory tends to lose value

Inventory tends to lose value over time due to several factors such as depreciation, obsolescence, spoilage, and market fluctuations. As inventory remains in storage, it may become outdated, particularly in industries with rapid technological advancements or changing consumer preferences. For example, electronics can quickly become obsolete as newer models are released.

Additionally, items that have a limited shelf life, such as perishable goods, will lose value as they approach expiration. Even non-perishable items can accumulate holding costs, including storage fees, insurance, and potential damage, leading to a decrease in market value over time.

Therefore, understanding that inventory typically loses value helps supply chain professionals make informed decisions regarding inventory management, including timing of sales, markdowns, and inventory turnover strategies to mitigate value loss.

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Inventory is unaffected by market changes

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