Page 2 - SCWS Module 1 Lesson 1.docx

Points to note:

1) The definition lists the four main accepted categories (also known as classifications) of inventory,
being
a. Raw Materials – part of manufacturing stock
b. Work-in-process – part of manufacturing stock
c. Finished Goods (end items) – part of distribution stock to external customers
d. MRO stock (Maintenance, Repairs and Operations) – stock used to support the running of
the business – its people, machines and office systems
2) Demand for inventory is categorised as
a. Independent – for the demand of end items (and spare parts) by external customers
b. Dependent – for the demand of Raw Materials and components in the making of end
items, based on a Bill of Material (BOM)
3) The functions of inventory – why inventory is carried at all and what it would be used for – are
listed as anticipation stock, hedge, cycle (lot size), fluctuation (safety, buffer, or reserve),
transportation (pipeline), and service parts. These will be dealt with later in the course

Stock is used through production and distribution business and is one of the biggest assets that a
business owns. That is why it is so important that those who are given the responsibility to look after
and control the stocks of the business, understand how important their job is.

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