For this question, you may want to study Chapter 12 inventory management. In class, we talked...

For this question, you may want to study Chapter 12 inventory management. In class, we talked about some different types of inventory. What are they and what do they mean?

Expert Solution

As per the question, the student wants to know what are the different types of inventory and what do they mean. Undermentioned are the different types of inventories

Raw materials – Raw materials are those types of inventories that are used in the conversion process that remains raw to something that has value in the eyes of the beholder. Raw materials are essential for the production and should remain visible so that a production unit gets an idea about what and how much needs to be reduced.
Finished goods – The control of this type of inventory is usually in the hands of distributors or by warehouse channels. Finished goods are those goods that have gone through rigorous and has the value in the eyes of the customer. It is considered as an inventory of completed products waiting for customer's orders.
Work in Progress – Work in progress includes that type of inventory that is currently processed or is a queue waiting to get processed. These inventories have passed the stage of raw materials but are not finished goods because they are not complete in all aspects.
Service Inventory –Service inventory is a sum total of all processes that are completed before the customer arrives. These are not in the physical form but are guided by the principle of intangibility and these ensure that firms to buffer the resources so as to work towards better customer service experience.
Transit Inventory – Transit inventories are those types of inventories that occurs when an organization transports, ships the materials from one place to another. It is also called pipeline or transportation inventory.
MRO Inventory – MRO is an acronym of Maintenance, repair, and operating and is that form of inventory that aid the production process and make sure that the operations go smoothly. These are not directly part of the finished products but have an important contribution towards them.
Buffer Inventory – Buffer inventories are maintained by organizations to avoid any uncertainty of avoiding any supply and demand. These are also called as safety stock because they are maintained to avoid any stock-outs.

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keosha answered 5 hours ago

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