Packing materials include any items that are used to package or ship items.
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Related: How To Calculate Safety Stock (With Examples) 5.
For example, a remote mountain grocery store may keep large amounts of unperishable foods as safety stock in the winter but not keep very much fresh produce. When calculating safety stock, it's important to consider the industry and the needs.Ī more remote area may require more safety stock during seasons where weather can make travel difficult, but keeping a lot of consumable safety stock may mean throwing out items that expire before they sell. Safety stock, also known as buffer stock, is inventory kept to meet company needs in case demand suddenly increases or a natural or human force interrupts the supply. For example, a furniture company's raw material inventory may include wood, hardware, paints and finishes. This may include pre-manufactured items or natural resources purchased from a different vendor. Raw materials are any items that are processed to become part of the finished product. Related: What Are Equivalent Units of Production? (How To Calculate Them With Examples) 3. To understand the value of materials and labor invested into work-in-progress inventory, you might calculate equivalent units of production. For example, a company that makes pillows may have some completed pillowcases as work-in-progress inventory that have not yet been stuffed and packaged. Work-in-progress inventory includes items that are partially assembled. For example, a car company may categorize vehicles as finished goods, while a car dealer may not since all the cars are complete before they arrive. For distributor or service companies, categorizing something as a finished good may not be as useful since these companies usually don't process or build their own goods. Manufacturing companies commonly have finished goods in their inventory that have not yet shipped. Finished goodsįinished goods are items that are completed and packaged for sale. Here are 15 types of inventory with examples to help you understand each one: 1. Some items may fall into more than one category, like finished goods that are being held as safety stock or excess inventory. Related: Learn About Being an Inventory Specialist 15 types of inventoryĬompanies may have different types of inventory depending on their industries and business models. Because inventory is so important, many organizations have specific personnel and systems dedicated to tracking inventory. Managing inventory carefully can help a business understand its resources, save money, store items more efficiently and keep the appropriate amount of products in stock to meet needs. Inventory can also be a verb that describes the act of counting or managing inventory for a company. Inventory describes the items that an organization owns, from raw materials to finished items waiting for purchase. In this article, we explore 15 types of inventory and discuss some tips for managing your inventory. If you're responsible for evaluating what your organization needs, it might be helpful for you to learn about the different types of inventory.
Businesses order stock, organize warehouses and even decide what products to offer based on their understanding of their own inventory. Inventory is a part of every business, whether it performs a service, distributes items to others or manufactures a product.
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