Raw Material Stocks
They are the stocks of the basic materials that the enterprises procure from other companies for use in production. In a business producing furniture, chipboard, chipboard-lam, contra-plaque, MDF, MDF Lam, Profile raw materials are taken as stocks. In a restaurant, flour, sugar, fat, meat, salt pulses, rice and so on. The products are used as raw material.
Products produced in one enterprise can be raw materials for other enterprises. For example, raw materials used by a company producing chipboard are wood residues, slag and glue. They are produced by pressing various sizes and are sold as raw materials to furniture producing enterprises.
Businesses have to keep stocks of raw materials even if they only produce on order. This is necessary in order to prevent production disruption due to the prolongation of the raw material supply time and to deliver the product time. Of course, the ease with which the raw material is found and the speed of supply can affect the quantities in stock.