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Suppose a TV manufacturing unit wants to raise its inventories from 1000 units to 2000 units during the year. Expecting sale of 5000 units during the year, the firm produces 5000+1000= 6000 TV sets. Actual sale for the firm are 5000 TV sets during the year.

This is an example of:

Solution

Correct Option: 1

The firm intentionally raised inventories from 1000 to 2000 units, i.e., planned addition of 1000 units. Since actual sales (5000) matched expected sales (5000), the actual inventory change equals the intended change. This is a planned accumulation of inventories.

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