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What Is Inventory? - Definition & Example

What Is Inventory? - Definition & Example
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  • 0:00 Definition of Inventory
  • 0:30 Inventory Control System
  • 0:40 Continuous Review System
  • 1:20 Periodic Review System
  • 1:55 Just-In-Time Inventory Control
  • 2:20 Lesson Summary
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Lesson Transcript
Instructor: Shawn Grimsley
Most businesses carry some inventory. In this lesson, you'll learn about what inventory is, some related concepts and be provided examples along the way. A short quiz follows the lesson.

Definition of Inventory

Inventory is a quantity of goods owned and stored by a business that is intended either for resale or as raw materials and components used in producing goods that the business sells. For example, motherboards warehoused at a computer company to be used in the assembling of its computer systems are inventory. The products displayed for sale and stored in the backrooms of a department store are inventory as well.

Inventory Control System

An inventory control system is a process a business uses to manage inventory. There are several different types of inventory control systems. Let's look at some of the more common systems.

Continuous review system: Under a continuous review system, inventory is continuously monitored. When the inventory of a particular good or product reaches a predetermined level, an order for a predetermined quantity of additional inventory will be placed. For example, a retail store may order six more coffee machines to sell when it's down to only three in inventory. Other names used for continuous review systems include event-triggered systems, fixed order size systems (FOSS) or economic order quantity systems (EOQ).

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