Raw Material
Every alternative product we tend to use has been made by victimization some or the opposite raw materials. it's the foremost crucial element of inventory for any producing unit and thus, managing inventory of raw materials becomes crucial too. as an example, natural latex obtained from trees is employed to create many finished product like mattresses, gloves, balloons, rubber bands, court game shoes, etc.
In short, associate unprocessed or minimally processed material (obtained as mineral ores, natural oil, agricultural product) that undergoes a metamorphosis for making a finished product in huge quantities is named a stuff.
Definition and clarification of the term:
Let’s take a glance at some formal definitions of raw materials-
The Oxford lexicon defines raw materials as “The basic material from that a product is created.” however that's a straightforward thanks to place it for basic understanding.
However, Wikipedia defines raw materials more,
“A stuff, additionally called a feedstock, unprocessed material, or primary goods, may be a basic material that's wont to turn out product, finished product, energy, or intermediate materials that square measure feedstock for future finished product.”
Types of raw materials
Though all the raw materials square measure obtained naturally, they will be divided into three sorts based mostly in line with wherever it's derived from.
Plant/tree-based – materials like vegetables, fruits, flowers, wood, resin, latex square measure obtained from plants and trees.
Mining-based– materials like minerals, metals, crude oil, coal, etc. square measure obtained by mining the planet.
Animal-based– materials like animal skin, meat, bones, milk, wool, silk square measure all obtained from animals.
Apart from this, a producing unit divides the raw materials into a pair of main classes.
Direct raw materialsThe primary element from that a finished product is created is named direct raw materials.For example, wood may be a direct stuff from that article of furniture like chair, tables, bed, etc. are made. Another example is animal skin used for creating purses, shoes, bags, etc.
Indirect raw materialsOn the opposite hand, indirect raw materials square measure the materials that supplement in creating the finished product from the direct materials.For example, the glue, nails, varnish, etc. employed in creating wood article of furniture like chair, table, bed, etc. square measure all indirect raw materials. Similarly, the buckles, metal hoops, zips, glue, lining cloth, colors, etc. employed in creating animal skin purses, shoes, and luggage square measure all indirect raw materials.
Importance of raw materials
From the above-discussed definition and which means, it's clear that manufacturing any finished product needs raw materials, that square measure then processed and created into finished product.
This is wherever inventory management comes into the image. it's necessary to keep up raw materials inventory within the correct amount and at the proper place to avoid any mishaps since the finished product that we tend to sell square measure made up of these materials.
Raw materials calculation formula
Now, returning onto some essential formulas to use for conniving raw materials.
To know what proportion stuff is employed within the producing method, we will use the below formula:
Opening stuff + stuff purchases – closing stuff = stuff used
