In business, inventory
is the "finished goods" product that is being stored until it is sold or consumed. Some examples:
- A grocery store's inventory consists of all the products on its shelves that it has purchased from distributors. The store is trying to sell its inventory to consumers.
- A food distributor's inventory consists of all the products in its warehouse that it has already purchased from manufacturers or farmers. The distributor is trying to sell its inventory to grocery stores, or perhaps to other distributors.
- A canned food manufacturer's inventory consists of all the cans of food in its warehouse that it has already manufactured. The manufacturer is trying to sell its inventory to food distributors, or perhaps directly to grocery stores.
Having too much inventory is a liability to any business, as it represents an investment that has not paid off, and if the inventory proves to be unsalable, the inventory will eventually have to be destroyed. Businesses always have to evaluate the ongoing cost of storing their inventory, balanced against the probability that they will be able to sell it eventually at a profit. If the ongoing storage cost is higher, then the inventory should probably be destroyed.
On the other hand, if the business stocks too little inventory, it may not be able to take advantage of some sales opportunities, if large orders were to be placed by its customers and the company were to find itself unable to deliver any product.
On a company's balance sheet, inventory is listed as an asset, for the reason that the company ought to be able to turn its inventory into cash by selling it.
is also the name of a group of British artists; see Inventory (artists)