Chapter 1 – Inventory

The five components of manufacturing are:

a. Raw materials – such as metal and food ingredients, are used in production as source materials.

b. works-in-progress (Semi Finished Goods) – goods that are in the process of being transformed during manufacturing and are about to be converted into finished goods

c. Finished Goods – products that have gone through the production and ready for sale

d. Packing Material – products used for packing of the goods.

e. MRO Goods(Maintenance, Repair, and Operating Supplies) – are also called consumables in various parts of the world. Maintenance and repairs goods like bearings, lubricating oil, bolts, nuts, etc., are used in the machinery used for production.

1 component for trading:

a. Merchandise/Trading Inventory refers to trading goods.

Retailers who buy and resell goods typically call inventory “merchandise,” which includes finished goods bought from producers and can be resold immediately.

Examples of merchandise include electronics, clothes, and cars sold by retailers.

Other types of inventory are:

Goods-in-transit inventories are transported from one site to another for various purposes, such as sales, purchase, and further processing.

Due to long distances, the inventory stays on the way for days, weeks and even months depending on distances.

Goods in transit may consist of any type of basic inventories.