What are the two main types of inventory?

The two main types of inventory are raw materials and finished goods. Raw materials are the basic inputs that are used in the production process to create products. These can include items like metals, plastics, or chemicals that are transformed into final products. Finished goods, on the other hand, are products that have completed the manufacturing process and are ready for sale to customers. This categorization is essential for managing inventory levels and understanding the production flow in an organization. Recognizing the distinction between these types helps businesses optimize their supply chains and production schedules effectively.