Which of the following is NOT a category of inventory?

The correct answer is based on the classification of inventory for businesses. In inventory management, inventory is categorized into several types that reflect the stage of production and supply chain processes. The primary categories include:

• Raw materials and components: These are the basic inputs used in the production process.

• Work in progress: This category refers to items that are in the process of being manufactured but are not yet finished products.

• Finished goods: These are products that have completed the manufacturing process and are ready for sale to customers.

Supplier contracts, however, do not fall into any of these traditional inventory categories. Instead, they represent agreements with suppliers regarding the provision of goods or materials. Therefore, they are not considered inventory but are more related to procurement and supply chain management.

Understanding these categories is essential for effective inventory management, as it allows businesses to track and manage resources efficiently, ensuring that they can meet demand while minimizing excess stock or shortages.