You own a crawfish salad sandwich restaurant. You make the best crawfish salad sandwiches in the city. Part of your secret is keeping the crawfish very fresh (and sassy).
As such, you can’t just fill a giant warehouse full of crawfish. You can only bring in the amount you plan to use in a single day. Also, to make sure each sandwich gets the extra TLC your customers deserve, you only make an order once somebody requests it. Each one gets made from scratch, as the orders come in.
You might not know it, but you're using pull-through production. The term refers to a kind of just-in-time manufacturing. That concept means the item isn't put into production until the company obtains an order. The "pull" part comes from the idea that materials are only "pulled" into the system as needed.
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Finance: What is inventory?2 Views
Finance allah shmoop What is inventory Well it's Just stuff
you have for sale in one form or another An
auto dealer Well all those cars she has sitting out
there in the sun is a dive bombing targets for
the birds Yeah while their inventory to the car dealership
the cars are inventory the loads of nose hair trimmers
sitting on the shelves at the well appointed nostril fine
store best nostril trimming store in the world Yet their
inventory albeit kind of gross ish inventory especially after use
the four thousand yards of denim cloth sitting in the
weaving factory waiting for thirteen year old girls in thailand
toe weave it all together to make levi's for the
gap Yep that cloth is inventory It isn't finished inventory
It's just a work in process not yet ready for
prime time or a prime thigh or whatever But it's
an asset for the company who owns it and it
is held as inventory on the balance sheet Work in
process right there at the balance sheet right there Okay
And when that inventory is sold and turned into revenues
it'll just become part of the expenses line on the
income statement usually has cost of goods sold or caw
Gse that's What people in the accounting bids say Cocks
thie Inventory is a good but inventory is always good
Of course as many a customer has learned after taking
a hefty shock straight to the hunger And that hurts
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What is work-in-process inventory? Manufacturing processes usually incorporate some form of assembly line platform. As such, different workstations...
Inventory turnover...way less delicious than an apple turnover. So...what is it?
Work-in-process inventory is just inventory... that is in the process of being built. In other words, it accounts for the inventory's asset value.