The term inventory refers to keeping records of items, constituent parts, and raw materials. Every enterprise requires an inventory to guarantee that you have sufficient stock on standby and also to identify if there are any shortages (Maxwell, 2017, p.5). Thus, keeping inventory ensures the smooth running of any enterprise. In this paper, raw materials, work in progress, and finished goods inventories will be discussed on their importance in gas stations, hamburger stands, clothing stores and machine shops.
Every company needs this inventory in order to be in a position to track the utilization of its resources. The records kept in the raw materials inventory are of those materials used by an organization to create and finish products (Chandra & Tulley, 2016, p.12). For instance, a gas station would keep inventory for gasoline while a hamburger stand would keep minced meat, a clothing store would keep clothes, and a machine shop would keep stainless steel. Furthermore, in a work-in-progress inventory, cars at a gas station would be classified as a work in progress and food being prepared in a hamburger stand. Also, attending to customer requests and grievances in a clothing store would be the data inputted in a work-in-progress inventory. Additionally, in the finished goods inventory, the cars that fuel in the gas station would be considered the finished goods. Moreover, ready-to-serve meals are the finished goods in a hamburger stand, whereas the number of clothes sold in a clothing store qualifies as the finished goods in that enterprise.
In all the above instances, the inventories mentioned above serve the purposes of retaining a constant record of inputs for the succeeding step in the whole process from when the good is manufactured, when it becomes a finished good, to when the finished good is delivered to the customer. Therefore, inventory creates a buffer for the various steps involved in producing a finished good and ensuring that all the steps in the supply chain have the required inputs for processing.
References
Chandra, V., & Tulley, M. G. (2018). Raw material inventory strategy for make-to-order manufacturing.
Maxwell, H. R. (2017). Who should control inventory?: Raw materials, materials in process, finished goods.