What is Inventory?
Inventory, Stock
How many items are in the warehouse right now?
What it means
Inventory is the quantity in the warehouse at this moment. If you put it in your bank account, it is the balance. It increases when you come in and decreases when you leave.
Inventory in the system is managed by warehouse and item. Write down where and what is there, such as “40 pieces of black refill in material warehouse” or “50 black ballpoint pens in finished product warehouse.”
At the pen factory
I want to make 100 pens on the second day, but I only have 40 pieces of black refill in stock. You realize that you are 60 pieces short compared to the required quantity of 100 pieces.
Why it matters
If you don't know what's in stock, you can't determine if you can make it, buy it, or send it to your customers. If you have too much inventory, money is tied up in warehouses, and if you have too little, production stops.
How this differs from Inventory transactions
Inventory is the current number, and inventory history is the entire history leading up to that number. This is the difference between balance and transaction history.
Related terms
- Inventory transactionsOne line left over whenever inventory moves. It is the same as the transaction details in your bankbook.
- Goods ReceiptCounting the arrived goods, placing them in the warehouse, and recording them in the system.
- ConsistencyThe total value of all records, the inventory on the screen, and the actual items in the warehouse match each other.
- Purchase orderAn order that asks a supplier to send something, how much, and by when.