Extra units that are held in inventory to reduce stock outs are called just-in-time inventory. The term inventory refers to both the raw materials utilized in production and the finished commodities that are ready for sale. The first-in, first-out method, the last-in, first-out approach are used for inventory valuation.
One of a company's most significant assets is its inventory because inventory turnover is a primary driver of revenue generation and, consequently, of profits for the company's shareholders. The three types of inventory are raw materials, work-in-progress, and finished goods. On the asset side of a company's balance sheet, it is categorized as a current asset.
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