All organizations (including JIT operations) keep supplies of inventory for reasons, such as maintaining independent operations, meeting variations in product demand, allowing flexibility in production scheduling, providing a safeguard for variation in raw material delivery time, and taking advantage of economic purchase order size.<\/p>\n\n\n\n
The inventory of materials may occur at different stages as well as departments of an organization. For instance, a manufacturing organization holds the inventory of raw materials and consumables need for production process, in addition to that of semi-finished goods at different stages held with different departments. The inventory of finished goods remains at plant, stores, distribution centers, etc. until it reaches the market and end consumers. In addition, both raw materials and finished goods in transit at different locations, also constitute the inventory, basis the owner of the inventory at a particular period of time. Organizations also hold inventories of spares for product servicing. Not only this, even defective products, parts and scrap are held as long as they are inventoried in the books of the organization, with an economic value.<\/p>\n\n\n\n
Input<\/strong><\/td>| Process<\/strong><\/td> | Output<\/strong><\/td><\/tr><\/thead> | Raw materials<\/td> | Work-in-process<\/td> | Finished goods<\/td><\/tr> | Consumables needed for processing \/ manufacturing, such as fuel, nuts & bolts, stationary, etc<\/td> | Semi-finished production at different stages, retained by different departments in an organization, such as production, work-in-process stores, quality control, final assembly, packaging, outbound store, etc<\/td> | Finished goods inventoried at distribution centers during logistics or supply chain<\/td><\/tr> | Items for Maintenance \/ Consumables<\/td> | Production waste and scrap<\/td> | Finished goods in transit<\/td><\/tr> | Packaging Materials<\/td> | Defectives and rejections<\/td> | Finished goods held with warehouses and dealers<\/td><\/tr> | Items purchased locally to be used in production process<\/td> | <\/td> | Spare stocks & purchased items<\/td><\/tr> | <\/td> | <\/td> | Defectives, rejections and sales returns<\/td><\/tr> | <\/td> | <\/td> | Repaired stocks and component parts<\/td><\/tr> | <\/td> | <\/td> | Sales promotion & sample stocks<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n | The main categories can be summarized as<\/p>\n\n\n\n
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