Types of Inventories

Types of Inventories

Inventory is an asset held by the organization. The inventory can be divided into following classes

a)    Inventory held for sale.

b)   Inventory held for consumption.

c)    Inventory under process.

It is important to note that different business have different inventory requirement. These requirements have been briefly described below

1.   Inventory Held for Sale:

Inventory held for sale means the inventory in the form of finished goods held by the manufacturer or retailer for sale. The technical name of this type of inventory is finished goods. This type of inventory is held both by manufacturer and retailers.

2.   Inventory Held for Consumption:

This type of inventory is to be used in consumption process like tools or raw material. This type of inventory is held in manufacturing business only.

3.   Inventory under process:

These are partially completed products, which are still in the process of production. This type of inventor is held by the manufacturer only. The technical name of this type of inventory is W.I.P (work in process).