Final answer:
The incorrect principle of merchandise location in a warehouse is 'Group working stock and reserve stock together', as working and reserve stocks are usually kept separate to optimize inventory management and operational efficiency.
Step-by-step explanation:
The principle that is not a part of merchandise location in the warehouse is 'Group working stock and reserve stock together'. In effective warehouse management, it is generally preferred to keep working (or frontline) stock separate from reserve stock for the ease of access and restocking. While grouping physically similar items and functionally related items together can help in increasing efficiency and reducing picking time, as well as grouping fast-moving items together to optimize retrieval; merging working and reserve stock may complicate inventory management and slow down the operation, especially if frequent restocking is required.