1. TYPE OF INVENTORY AND NEED OF
INVENTORY
PRESENTED BY SILPA.B
M.Sc III SEM IF
CUSAT

2. INTRODUCTION
• Control and maintenance of inventory of physical
goods is common to all enterprises.
• Inventory aid in increasing production rate and
lowering manufacture cost.
• For manufacturing firms, inventory accounts for a
large percentage of working capital.
• Managing independent demand based on its own
usage history and statistical variation.

3. DEFINITION OF INVENTORY
Stock or Store of Goods maintain on
hand at or near a business`s location to meet
demand and fulfill its reason for existence in
a firm

4. According to International Accounting Standard:
2(IAS:2) Inventory as tangible property which is,
a) Held for sale in the ordinary course of business
b) In the process of production for such sale
c) To be consumed in the production of goods or
service for sale

5. TYPES OF INVENTORY
a) Necessary for the functioning of the firm
b) Different types based on different sectors in the
firm
c) Merchandising Inventory and Manufacturing
Inventory

8. RAW MATERIAL
a) Basic material used in manufacturing firm for the
production of product.
b) Purpose of maintaining raw material inventory-is
to uncouple, the production function from the
purchasing function.
c) Examples- leather,dyes,snaps,

9. STORES AND SPARES
a) Products which are accessories to the main
product produced for the purpose of sale.
b) Eg-bolts,nuts,clarps,screw etc.
c) These are bought from outside or they are
manufactured in the company.

10. WORK IN PROCESS
a) Materials and components have been committed
to the production process
b) Purpose is to uncouple the various operations in
the productive process
c) It includes all the raw material in various stages
of development
d) Eg- labour,rawmaterial.

11. FINISHED GOODS
a) Completed products awaiting sale
b) Purpose is to complete the production and sales
function
c) Consists of cost of raw material, labor and
manufacturing overhead for the entire product

12. a) Buffer inventory :-Compensate - uncertainties in
supply and demand. Finished goods.
a)Cycle inventory:- Available inventory.Occurs
because the one or more stages in the operation
are not able to supply all goods,they produce
simultaneously
b)Anticipation inventory:-Building up extra stock for
periods of increase demand
c) Pipeline inventory:- Goods still in transit or in the
process of distribution have left the factory but
not arrived .

13. NEED OF INVENTORY
a) Smooth out gaps in the rate or timing of
demand and supply
b) Meet unexpected demand
c) Meet variations in demand
d)Hedge against price increases
e)Quantity price increase
f) Long lead and high demand items

14. CONCLUSION
a) All organisation keep inventories in smaller or
larger scale
b) Holding inventories help the companies remain
independent and free from render dependencies