Types of Inventories:
In general, a manufacturing company has the following sorts of stocks on hand:
- Raw materials: Round bars, angles, channels, pipelines, and other basic unfabricated materials, such as these, are examples of raw materials. They have not undergone any processing since being acquired from the suppliers.
- Bought-out parts: These parts refer to those finished parts and subassemblies purchased from outside suppliers per the company’s specifications.
- Work-in-process inventories (WIP): These refer to the items or materials in a partially completed condition of manufacturing e.g., semi-finished products at the various stages of manufacture.
- Finished goods inventories: These describe the finished goods that are prepared for delivery.
- Maintenance, repair, and operating stores: Normally these inventories refer to items that do not form part of the final product but are consumed in the production process, e.g., machine spares, oil, and grease.
- Tools inventory: Includes both common and unique tools.
- Miscellaneous inventories: Miscellaneous inventories – office stationeries and other consumable stores.
Additionally, there are four other categories into which inventories can be divided: (i) fluctuation inventories, (ii) anticipation inventories, (iii) lot size inventories, and (iv) transportation inventories.