13.1.0 Definition Of Inventory :
The Dictionary meaning of Inventory is 'a list of goods'. In a wider sense, inventory can be defined as an idle resource which has an economic value. It is however, commonly used to indicate various items of stores kept in stock in order to meet future demands.
- In any organization, there may be following four types of inventory:
(a) Raw materials & parts-- These may include all raw materials, components and assemblies used in the manufacture of a product;
(b) Consumables & Spares -- These may include materials required for maintenance and day-to-day operation;
(c) Work in progress -- These are items under various stages of production not yet converted as finished goods;
(d) Finished Products -- Finished goods not yet sold or put into use.
