The definition of inventory typically includes the following items: raw materials, work-in-progress (partially finished goods), finished goods ready for sale, and in some cases, supplies used in production or for maintenance. Inventory refers to all these items held by a business for the purpose of resale or production.
Key components of inventory:
- Raw materials: Basic materials used in the manufacturing of products.
- Work-in-progress (WIP): Items that are in the production process but not yet finished.
- Finished goods: Completed products that are ready to be sold.
- Supplies: Items used in production or operations that support the business but might not be part of the final product.
This broad definition encompasses physical goods in various stages of production or ready for sale, and in some industries, such as services, inventory can also include intangible items related to the service delivery process.
