Which statement is true regarding inventory management?

The statement regarding inventory management that is true highlights the relationship between inventories and production. Effective inventory management is pivotal in ensuring that production processes run smoothly. When inventories are managed alongside production, it allows for better synchronization of supply and demand, leading to a more efficient operation. This alignment helps prevent stockouts or overproduction, which can tie up resources and increase costs.

Furthermore, managing inventories in conjunction with production planning enables organizations to maintain optimal levels of raw materials, work-in-progress, and finished goods. This collaborative approach ensures that manufacturing operations are supported by the right amount of inventory at the right time, ultimately enhancing overall productivity and service levels to customers.

In contrast, the other statements fail to accurately reflect the importance and implications of inventory management. For example, inventories are often a significant asset on the balance sheet, and the costs associated with carrying inventory, including storage, insurance, and capital costs, can be substantial. Additionally, inventory is highly relevant at the production planning level as it affects scheduling, resource allocation, and overall production efficacy.