Business – 4.2 Inventory management – Managing inventory | e-Consult
4.2 Inventory management – Managing inventory (1 questions)
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Work‑in‑progress inventory consists of items that have entered the production process but are not yet completed. It acts as a buffer between stages of production, smoothing out variations in processing times and helping to maintain a steady workflow.
By holding WIP, a firm can:
- Reduce idle time for equipment and labour, improving overall efficiency.
- Identify bottlenecks early, allowing timely corrective actions and better cost control.
Comparison of inventory types:
| Inventory Type | Stage in Production | Primary Purpose |
|---|---|---|
| Raw Materials | Pre‑production | Provide inputs for manufacturing. |
| Work‑in‑Progress | During production | Maintain flow and absorb process variability. |
| Finished Goods | Post‑production | Meet customer demand promptly. |