Inventory Classifications
- Raw material
A raw material inventory includes all items that after being received in the organisation require additional processing before becoming an identifiable part of the finished product.
- Purchased parts
This classification of inventory is applied to component parts of a product that need no additional processing before being assembled into the finished product. In some cases, this material may be classified as raw material inventory.
- Work-in-process
All material that leaves either the raw material warehouse or the purchased parts warehouse enter the work-in-process inventory until the product is completed and placed in finished goods.
- Finished goods
This is the inventory of finished goods. These are quantities of finished goods that are held at the factory awaiting shipment.
- Supplies
All materials needed for the operation of the plant that are not used as parts of the finished product are classified as supplies. They are also referred to as indirect materials.
