November 1, 20212 min read
Share on facebookShare on TwitterShare on Linkedin

Any tangible goods which are part of a business that is intended to be sold is considered as inventory. This can include various products and items that the business puts up for physical sale to the general public.

If a business is low on inventory, it will usually mean that a stock item is either out of stock, demand has increased and supply has decreased, or the need thereof has gradually reduced.

Businesses in retail and hospitality are great examples of where you will find inventory. These items will include clothing, shoes, furniture, food items, consumables, etc. Any item that is available to be purchased can be considered as tangible goods or inventory.

Today businesses are making use of inventory management software to assist with stocktaking of all current items currently available in their store.

Four types of inventory

  1. Raw Materials: Any item that is of a natural existence that will be later on used to help manufacture a new product. Wood can be considered a raw material, as it can be turned into desks, chairs, beds, and other items.
  2. Work In Progress Items: These are all items that are accounted for by the business that have yet been completed. Although these items are not yet fully completed, businesses still consider them as part of their inventory to keep track of supply and demand.
  3. Available Goods: Once items have been manufactured from raw materials, they are considered finished goods or available goods. These items will either be stored away for later use, or directly be put up for sale depending on the intended need.
  4. Excess Goods: Finally, if there is an overhaul of goods in the store, businesses will usually withhold them until older items have been sold.