The correct option is 2 and 3 only.
Explanation
Inventory refers to the stock of unsold finished goods, semi-finished goods, or raw materials held by a firm. Changes in inventory levels are classified as accumulation (increase in stock) or decumulation (decrease in stock). These changes can be either planned (deliberate strategy) or unplanned (unexpected result of market fluctuations).
Statement 1 is Incorrect:
If a firm sells less than it expected, the unsold goods pile up, leading to an increase in stock. This results in unplanned accumulation of inventory, not decumulation. The firm is left with more inventory than anticipated due to lower demand.
Statement 2 is Correct:
If a firm sells more than it expected, it must meet the excess demand by utilizing its existing stock. This leads to an unexpected reduction in stock levels, resulting in unplanned decumulation of inventory.
Statement 3 is Correct:
Planned accumulation occurs when a firm intentionally decides to raise its inventory levels (e.g., anticipating future demand). To achieve this, the firm produces more output than its expected sales for the current period, deliberately adding to its stock.
Key Takeaway:
Unplanned inventory changes are caused by the discrepancy between expected and actual sales, whereas planned inventory changes are voluntary decisions made by the firm to adjust stock levels.