What Are The 5 Types of Inventory.Knowing the value of goods is a common task in companies, as well as in other situations where you want to know exactly what you have and what its value is.
In companies it is important to establish a relationship between the patrimonial elements with their value, this is called Inventory. Thus making an inventory consists of analyzing the elements of a heritage, describing and analyzing them.
What Are The 5 Types of Inventory.
The five types of inventory commonly recognized in business and supply chain management are as follows:
- Raw Materials: These are the basic materials or components that are used in the production process. Raw materials are typically purchased from suppliers and are used to create finished goods. Examples include wood, steel, plastic, or fabric.
- Work-in-Progress (WIP): This type of inventory refers to products that are in the middle of the production process. It includes partially completed goods that are being worked on or processed further before they become finished products. WIP inventory represents the value of materials, labor, and overhead costs invested in the unfinished products.
- Finished Goods: Finished goods are the completed products that are ready for sale or distribution to customers. These are the end products of the manufacturing or production process. Examples include electronics, clothing, furniture, or automobiles.
- Maintenance, Repair, and Operations (MRO): MRO inventory consists of items that are used in the day-to-day operations of a business but are not directly incorporated into the final product. These can include tools, spare parts, lubricants, cleaning supplies, or other materials necessary for maintaining equipment and facilities.
- Goods in Transit: This type of inventory refers to products that are in the process of being transported from one location to another. It includes goods that have been shipped but have not yet reached their intended destination. Goods in transit are often considered as inventory because they represent the ownership and value of the goods until they are received by the customer.
It’s important to note that the specific types of inventory may vary depending on the industry and nature of the business. These five types provide a general framework for understanding and managing inventory in various contexts.
