What is the typical duration of an inventory cycle?

The typical duration of an inventory cycle varies depending on the industry context and the nature of the inventory itself, but the range of 2 to 4 years is generally considered reasonable for many industries, particularly those with products that have a longer shelf life or where inventory turnover is less frequent. This timeframe allows businesses to manage production, sales, and restocking efficiently without resulting in excess inventory, which can lead to higher holding costs and potential obsolescence.

In industries such as manufacturing or heavy equipment, longer inventory cycles like 2 to 4 years can be common due to the nature of the products, which may not be sold as quickly as fast-moving consumer goods (FMCG). In this context, the correct answer reflects a balanced view of inventory management practices and the typical behaviors observed across various industries.

The other options suggest durations that are either too short or excessively long for typical inventory cycles seen in most sectors. An estimate of 1 to 2 years may apply to some high-turnover industries, but it does not encompass a broader range of inventory practices, while options suggesting 4 to 6 years or longer tend to indicate a situation of stagnant inventory or products that do not sell quickly enough, which is not ideal for most businesses.