The various types of Inventory are giving below:  

(i) Raw Materials: Raw materials consist of all the items that are processed to make the final product. In a cookie manufacturing company, the raw materials are items like milk, sugar, and flour that are used in the different stages of production. When we talk about raw materials, it is essential to understand that raw materials used by a manufacturing company can either be sourced from a supplier or be a by-product of a process. In our cookie manufacturing company, the raw materials will be mostly sourced from various suppliers. However, in a sugar manufacturing company, only the sugarcane is brought in from different farmers.

(ii) Work in Progress: When raw materials have been sent for processing but have not yet been approved as finished goods, this stage is known as work in progress. In a cookie manufacturing company, after the raw materials have been processed and the cookies have been moulded, they go for a quality check before they are passed for final packaging. All the cookies which are waiting for their quality check are considered work in progress. To put it in simple words, the work-in-progress category consists of all the items that have been processed but not sent for sale.

(iii) Finished Goods: Finished goods are the final items that are ready for sale in the market. These goods have passed through all stages of production and quality checking. So for the cookie manufacturer, the final packets of cookies that are sent to the market for selling after undergoing quality checks will be the finished goods. Raw materials, semi-finished goods, and finished goods are the three main categories of inventory that are accounted for in a company's financial accounts. There are other types as well which are maintained as a precautionary measure or for some other specific purpose.

(iv) MRO Inventory: MRO stands for Maintenance Repairing and Operating supplies, this type of inventory is mostly relevant for manufacturing industries. MRO items are not accounted for as inventory items in books of accounts, however, they play a crucial role in the day-to-day working of an organisation. MRO supplies are used for the maintenance, repair, and upkeep of the machines, tools, and other equipment used in the production process. Some examples of MRO items are lubricants, coolants, uniforms and gloves, nuts, bolts, and screws.

(v) Buffer Inventory: In the manufacturing or trading business, fluctuations and market movements cannot always be predicted. Such changes can have a negative impact on the sales or production process, which can lead to out-of-stock situations. Buffer inventory attempts to compensate for this by following the adage that prevention is better than cure. Buffer inventory (also known as safety stock), consists of the items stored in the warehouse of a store or a factory to cushion the impact of unexpected shocks.

(vi) Decoupling Inventory: Most manufacturing is carried on by multiple machines. The output of one machine is fed into the next machine for further processing. However, the process only works smoothly if all the machines work in tandem. A breakdown in any of the machines can derail the entire process, which is when decoupling inventory comes into the picture. Decoupling inventory consists of items which are kept in reserve to be processed by another machine if the previous machine fails to produce its usual output.

(vii) Transit Inventory: Transit inventory refers to items that are being moved from one location to another, such as raw materials being transported to the factory by railway or finished goods being transported to the store by truck.