Normal inventory:
Normal inventory is required to support the replenishment process under conditions of certainty. In other words, if demand and order cycle time never change, normal stock are all the organization would require to meet its customer’s needs.
Safety stock:
Safety stock is held in position to normal inventory to cover uncertainty in demand and lead time. Its purpose is to protect the firm and customer against stock outs.
In-transit inventory:
In-transit inventory is en route from one location to another. It may depend on the shipper or the customer depending on the terms of sale.
Speculative stock:
Speculative stock is held for reasons other than meeting current demand needs. Management may fear the price of needed raw material will rise in future or that the availability may be limited for some reason and elect to buy a large quantity in anticipation of either eventuality. Alternatively, vendor may offer an especially low price if large quantity is purchased at one time.
Seasonal inventory:
Seasonal inventory is accumulated in advance of selling season. It provides the management the ability to stabilize production and maintain long term labor force even when the majority of sales occur during a relatively small part of the year.
Dead stock:
Dead stock that no one wants, at least immediately because management expects demand to resume at some point in the future or it may cost more to get rid of the item than it does to keep it. The most compelling reason for maintaining these goods is customer service.
There are certain more types of inventory which can be classified as follows:
- Raw material inventory
- Work-in-process inventory
- Finished goods inventory
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