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1) raw materials inventory 2) WIP inventory 3) MRO 4) finished goods inventory
Understanding and classifying your inventory can help you plan and budget to achieve your business goals.
There are three main types of inventory:
If your business has a lot more work-in-process inventory than finished goods inventory, it might not be finishing goods quickly enough to fill orders. If your raw materials inventory is a lot less than your work-in-process inventory, you might be running out of raw materials.
Consumables and supplies expenseConsumables are items that you purchase to help you run your business on a day to day basis. They fall under supplies expense as incidental items that are expected to be consumed within one year. Consumables includes factory supplies for maintenance such as machine oils and rags, or office supplies such as light bulbs, stationery or ink cartridges.
Examples of different types of inventoryDifferent types of businesses have different types of inventory.
If you have a manufacturing business, you buy inventory to change it into another good that you sell to your customers. Your customers may be consumers and other businesses.
Examples of inventory that a manufacturing business may have include:
Retailers and distributors don’t usually have raw materials inventory and unfinished goods inventory. If you’re a retailer or distributor, most inventory you have is finished goods inventory, such as: