Inventory represents a business’s stocked goods or materials. As such, the terms “stock” and “inventory” are often used interchangeably. You can think of inventory as items that are either used up to do a job, inputs in a production process or products sold to customers.A simple example of tracking inventory is a furniture store. When a piece of furniture like a chair or sofa is being purchased and gets scanned at the register, the furniture store cares about the quantity of that item, which must be subtracted from the inventory levels and eventually replenished. The data from the piece of furniture (like a chair or sofa) is not the priority; it’s the quantity of the set of identical inventory items that matters.
Typically, inventory is stored in a warehouse or storage area and tracked by quantity, as well as by a common stock keeping unit (SKU), which identifies each stocked item by distinct attributes. Batch or lot numbers are often used to track perishable inventory items, such as food or medications, in groups based on expiration or production dates. In addition, inventory such as parts and components can be tracked by serial numbers.