Inventory - is defined as the products or material that an organization holds for future sale or for repairs/warranties/replacements etc. Inventory can be classified as following
1. Raw materials required for producing goods (raw material inventory)
2. Unfinished goods (work in progress inventory)
3. Goods available for sale (finished goods inventory)
In financial statements, inventory is classified as an 'Asset' as it has the potential of generating cash in the future. However, as per lean philosophy, it is considered as a 'Waste'.
An application oriented question on the topic along with responses can be seen below. The best answer was provided by Priyer on 30th January 2017.