How are inventories in a plant typically classified?

Inventories in a plant are typically classified into finished goods, work in process, and raw materials based on their stage in the production process and their function within the manufacturing system.

Finished goods refer to products that are completed and ready for sale. Work in process includes items that are in various stages of production but have not yet completed the manufacturing process. Raw materials are the basic ingredients that are used to create finished products. This classification helps organizations manage their inventory effectively, ensuring that they can meet customer demand while maintaining efficient production practices.

This systematic approach to inventory classification promotes better inventory control, assists in cost management, and supports planning and production scheduling. Other classifications, such as aesthetic value or seasonal demand, do not align with the operational needs and processes of inventory management in a typical manufacturing environment. Additionally, delivery frequency is relevant to logistics but does not inherently classify the type of inventory in the production process.