raw material inventory

Materials that are usually purchased but have yet to enter the manufacturing process.

work-in-process (WIP) inventory

Products or components that are no longer raw materials but have yet to become finished products.

MRO

Maintenance, repair, and operating materials.

finished-goods inventory

An end item ready to be sold, but still an asset on the company's books.

shrinkage

Retail inventory that is unaccounted for between receipt and sale.

pilferage

A small amount of theft.

holding cost

The cost to keep or carry inventory in stock.

ordering cost

The cost of the ordering process.

setup cost

The cost to prepare a machine or process for production.

setup time

The time required to prepare a machine or process for production.

lead time

In purchasing systems, the time between placing an order and receiving it; in production systems, the wait, move, queue, setup, and run times for each component produced.

reorder point (ROP)

The inventory level (point) at which action is taken to replenish the stocked item.

safety stock

Extra stock to allow for uneven demand; a buffer.

quantity discount

A reduced price for items purchased in large quantities.

fixed-period inventory systems

Inventory systems in which the firm places an order after a fixed time interval.