BOP Program Statement 8331.03 § 4

a. Inventory. The aggregate of items of tangible personal property that (1) are held for sale in

the ordinary course of business, (2) are in process of production for future sale, or (3) are basic

materials stored for future use in the production of customer orders.

b. Inventory Control. Inventory control is concerned with minimizing the total cost of

maintaining and handling material or product. Its function is to keep track of inventory, maintain

records to reflect total stock available and provide accountability of material movement, keep

track of inventory allocated for future consumption, process deliveries from vendors/production,

and facilitate customer shipments and returns.

c. Inventory Values. The value assigned to each item held as inventory. FPI uses the moving

average cost method for raw materials (i.e., the value of stock on hand with the latest acquisition

value added, divided by units on hand after latest receipt). Standard cost estimates establish

standard prices for semi finished and finished products. Standard cost is a planned value for

executing an operation, based on an approved bill of materials and work measurements. Standard

P8331.03 03/19/2015 2

values are used in costing, scheduling, and capacity planning to calculate costs, execution times,

and capacity requirements.