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Linu senan P.R roll no:16
• Inventory is defined as a stock or store of goods held by the firm for the purpose of manufacturing various products for sale to realize revenue for the firm.
TYPES OF INVENTORY
Raw material Inventory Work-in-process Inventory Finished goods Inventory MRO goods Inventory
Raw material Inventory
These are material inputs of production process, which are used to manufacture the final product/service
• The production of the final product takes time to complete. Hence inventory of the stock in process which is to become the final product has to be maintained in between the successive stages of the production process. When manufacturing process is long , W.I.P Inventory is found at many different stages of production process
Finished goods Inventory
• These are finished and final products, which are ready for sale. It is held in order to reduce the demand and supply gap of the product
MRO goods Inventory
• Maintenance, repair, and operating supplies, or MRO goods, are items that are used to support and maintain the production process and its infrastructure. These goods are usually consumed as a result of the production process but are not directly a part of the finished product. Examples of MRO goods include oils, lubricants, coolants, ect……
Avoiding loss related to the gap between the demand and supply of gods Gaining quantity discounts Reduction of ordering cost Increase the efficiency of production run Act as a buffer stock Creation of goodwill with customers Achieve smooth and efficient production run