Among the following identify the condition where firms face unplanned de-cumulation of inventories.

Unexpected rise in sales.

The correct answer is Option (1) → Unexpected rise in sales.

Unplanned de-cumulation of inventories means that firms are selling more goods than they had anticipated, leading to a reduction in stock (inventory) that was not planned.

• When there is an unexpected rise in sales, firms’ inventory levels decrease more than expected, as goods are sold faster than they can be replenished.

• This is called unplanned de-cumulation because the firm did not intend to reduce its inventories so quickly.