Which are the three major types of inventory?

• A. Raw materials, work-in-process (WIP), and finished goods.
• B. Forecasted inventory, seasonal inventory, safety stock.
• C. Buffer stock, cycle stock, decoupling stock.
• D. Promotional inventory, obsolete inventory, dead stock.

Answer: (A)

The main idea is understanding how inventory fits into the production process. The three major categories represent stages from inputs to finished products. Raw materials are the basic inputs purchased to be used in making the product. Work-in-process are items that are already in the production line but not yet finished—they’re partially completed and need more work. Finished goods are the products that have completed production and are ready to be sold to customers. These categories together describe the flow from sourcing materials to delivering a finished item.

Other options describe inventory by purpose or status (like safety stock or obsolete stock) or by how stock is used in operations (like cycle stock or decoupling stock). While these exist, they don’t capture the fundamental production flow in the same way as the trio above.