types of inventory

types of inventory

Direct materials inventory

all the direct material in the store of the company which is used in the manufacturing process or is waiting to be used such as , cloth in the textile company

Work in process inventory

 the goods that is partially finished but not yet a finished good and it still under processing to reach the final form or to get the final product
For example, soda drinks which has a lemon flavor
Bottles of soda drinks is a work in process inventory before adding the lemon the lemon flavor and after adding , it will be a finished good

Finished goods inventory

goods which are completed and are ready for sale 

Hint

It was mentioned before that we have 3 types of companies in our economy but only the manufacturing companies have these 3 types of inventory

The merchandising companies purchase tangible finished goods to be sold without any change in the basic form so, this type of companies only have one type of inventory which is finished goods inventory which are ready for sale 
The service sector companies provide an intangible product ( provide services like the companies which provide the internet service ) so they don't hold inventories but they deliver a service