An inventory is any stock of economic resources that is stored for future use. It is commonly used to indicate materials, raw materials in progress, finished goods, packing materials, spares, etc. stocked in order to meet an expected demand or distribution in future. Even though inventory of materials is an idle resource, in the sense it is not meant for immediate use, it is almost a necessity to maintain some inventories for the smooth functioning of an organization.

Advertisement

From the logistics operations point of view, the decision regarding inventory are extremely crucial. They have a high impact on logistics operations. Inventory decisions are high-risk because without proper inventory assortment, marketing may find that the sales are lost and customer satisfaction will decline. Likewise, inventory planning is very crucial for manufacturing activities as well. Raw material shortages can either shut down a manufacturing line or it may force modification of production schedules. Again, overstocking of inventories can also create problems. Overstocks increase cost and reduce the profitability due to

  1. increased warehousing requirements
  2. increased working capital requirements
  3. deterioration in quality of goods
  4. fear of obsolescence
  5. Increased interest amounts, insurance premiums, taxes etc.

 

Types of Inventories

Several types of inventories are maintained by organizations. Some of the major inventories are:

 

Raw materials: Raw materials, required for production of finished products are one of the basic components of inventory for a manufacture. Shortage of raw materials can cause production stoppage or change in production Schedule which in turn may result in a shortage of finished goods. Thus sufficient quantities of raw materials need to be stored to cope with uncertain situations. However, where shortage of raw materials can disrupt normal manufacturing operations, excessive inventories can increase inventory carrying costs and reduce profitability.

 

Finished Goods: Finished goods are another important part of inventories, especially for the wholesalers and manufacturers. While holding finished goods inventory, it is important to have a adequate and not excess stock of inventories as they may incur cost as well as loss if the excess inventory is not sold out in time.

 

W.I.P.: Work In Progress (W.I.P.) inventory is often maintained between manufacturing operations within a plant to avoid production hold ups in case a critical machine or equipment were to breakdown and also to equalize production flow, since not all manufacturing units produce at the same rate.

 

Spare parts: Spare part inventories are mainly held for purpose of coping up with untimely breakdowns in machinery and facilities. This may form a minor part of the inventory, however are as necessary as holding raw materials inventory.

 

Advertisement
The following two tabs change content below.
We, at BMS.co.in, believe in sharing knowledge and giving quality information to our BMS students. We are here to provide and update you with every details required by you BMSites! If you want to join us, please mail to [email protected]
15 Comments
  1. tejas 8 years ago

    good and important notes for bms

  2. 온라인바카라 4 months ago

    … [Trackback]

    […] Read More here to that Topic: bms.co.in/explain-the-types-of-inventory/ […]

  3. … [Trackback]

    […] There you can find 21073 additional Info to that Topic: bms.co.in/explain-the-types-of-inventory/ […]

  4. … [Trackback]

    […] Here you will find 88915 additional Information on that Topic: bms.co.in/explain-the-types-of-inventory/ […]

  5. 카지노사이트 3 months ago

    … [Trackback]

    […] Read More on that Topic: bms.co.in/explain-the-types-of-inventory/ […]

  6. ignou mba project 3 months ago

    … [Trackback]

    […] Find More here on that Topic: bms.co.in/explain-the-types-of-inventory/ […]

  7. 카지노 3 months ago

    … [Trackback]

    […] Find More here to that Topic: bms.co.in/explain-the-types-of-inventory/ […]

  8. Online Shopping 2 months ago

    … [Trackback]

    […] Read More here on that Topic: bms.co.in/explain-the-types-of-inventory/ […]

  9. Trackback

    Interesting post

  10. chloroquine phosphate 2 months ago

    Many thanks

    Interesting blog, good post.

  11. 바카라사이트 2 months ago

    … [Trackback]

    […] Find More on to that Topic: bms.co.in/explain-the-types-of-inventory/ […]

  12. anywhere lesson [url=[Link deleted]asthma inhalers without an rx[/url]
    primarily comparison early spray generic ventolin absolutely
    fill buy asthma inhalers without an rx deeply equal [Link deleted]

  13. ignou report 1 month ago

    … [Trackback]

    […] Find More on that Topic: bms.co.in/explain-the-types-of-inventory/ […]

  14. buy tylenol 1 month ago

    buy tylenol

    Explain the types of Inventory? – BMS: Bachelor of Management Studies Portal

  15. … [Trackback]

    […] Find More on that Topic: bms.co.in/explain-the-types-of-inventory/ […]

Leave a reply

Your email address will not be published. Required fields are marked *

*

*

BMS.co.in is aimed at revolutionising Bachelors in Management Studies education, also known as BMS for students appearing for BMS exams across all states of India. We provide free study material, 100s of tutorials with worked examples, past papers, tips, tricks for BMS exams, we are creating a digital learning library.

Disclaimer: We are not affiliated with any university or government body in anyway.

©2020 BMS - Bachelor of Management Studies Community 

A Management Paradise Venture

Ask Us On WhatsApp
or

Log in with your credentials

or    

Forgot your details?

or

Create Account