Concept explainers
Identify the different types of inventories (raw materials, work in process, and finished goods) carried in the following organizations: gas station, hamburger stand, clothing store, and machine shop. What functions (purposes) do these inventories perform?
To identify: The different types of inventories carried in the organization.
Explanation of Solution
Types of inventories carried:
Gas station:
It has no raw material or work-in-process goods. The finished goods such as gas, tires, oil, other car parts and other general store items will be the inventory.
Hamburger stand:
The raw material is meat patty, onions, and bun. The work in process will involve frying burgers or burgers that are being assembled. The finished goods are hamburgers or a bun with garnishes.
Clothing store:
There are zero raw materials or work in progress. The clothes are the finished goods that are considered as inventory.
Machine shop:
The raw material is the pieces of unformed steel. The work in process are the orders that are finished partly. The finished goods are the completed orders waiting to be shipped to the customers.
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Chapter 14 Solutions
Operations Management In The Supply Chain Decisions And Cases 7th
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