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Inventory Management

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Part of the Studies in Finance and Accounting book series


For the manufacturing and distributive trades, inventories (or stocks) constitute a substantial portion of the total assets employed and, as will be seen, a good deal of control and management can be applied to them. Inventories can be broken down into the following types:

  • Raw materials and bought-in components. These represent stocks held by manufacturing industries prior to their being utilised in the production process.

  • Work-in-progress. This is the term given to a product which is only part-way through a manufacturing process. It consists of raw materials and bought-in components, labour costs, subcontracting costs and various manufacturing costs.

  • Finished goods. These are the products that the company sells to its customers. In the case of the distributive industry, finished goods are likely to be the only type of inventory.

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© 1976 Michael Firth

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Firth, M. (1976). Inventory Management. In: Management of Working Capital. Studies in Finance and Accounting. Palgrave, London.

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