What is pipeline inventory?

• A. Inventory in transit
• B. Inventory stored in a retail warehouse awaiting sale
• C. Obsolete inventory
• D. Safety stock

Answer: (A)

Pipeline inventory is the stock that is in transit between locations in the supply chain. It includes goods that have left a node but haven’t yet arrived at the next one—ships moving from supplier to plant, from plant to distributor, or from distributor to store. This inventory is tied up in transit due to lead times, and it counts toward total inventory even though it isn’t sitting in a warehouse ready for sale. It’s different from stock stored in a warehouse awaiting sale, obsolete stock, or safety stock, which are either on-hand at a destination, unused/expired, or extra buffer kept to cover variability. For example, components ordered from a supplier that take two weeks to arrive contribute to pipeline inventory during those two weeks of transit.