What are the three main types of inventory?

The three main types of inventory encompass raw materials, work-in-progress, and finished goods, which are fundamental components of supply chain management.

Raw materials are the basic inputs that are used in the production process to create a finished product. They are crucial for manufacturing and directly relate to the cost of producing goods.

Work-in-progress refers to items that are in the process of being manufactured but are not yet completed. This category represents the various stages of production where materials and labor are applied to create goods, highlighting the ongoing nature of manufacturing operations.

Finished goods are the completed products that are ready for sale and distribution to customers. This type of inventory represents the end result of manufacturing processes and is critical for satisfying customer demand.

Understanding these three categories is essential for effective inventory management, as each type plays a significant role in maintaining an efficient production process, managing supply chain flows, and meeting market demands.