Inventory refers to any goods or materials a company keeps on hand to either sell directly to a customer or to manufacture products. Four main types of inventory are: # Raw materials are the base materials a company uses to produce or finish products, such as the steel used to manufacture a car. # Components are also used to create a finished product, but, unlike raw materials, they have gone through some level of production and can be recognised as a product, such as a lug nut used to assemble a car. # Work-in-progress (WIP) are items in some stage of production but not yet ready for sale, such as a car’s chassis. # Finished goods are ready-to-sell products used to fulfil customer orders, such as a fully assembled car.