BOP Program Statement 8351.02 § 3

For this program statement’s purposes, these terms are defined as follows:

a. Inventory. Items of tangible personal property held for sale in the ordinary course of

business, are in the process of production for future sale, or are basic materials stored for future

use in the production of customer orders.

b. Inventory Control. The process of minimizing the total cost of maintaining and handling

material or product and safeguarding assets by maintaining records to reflect total stock

available, providing accountability of material movement, keeping track of inventory allocated

for future consumption, processing deliveries from vendors/production, and facilitating 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 the units on hand after latest receipt).

d. Standard Cost. A planned value for executing an operation, based on an approved bill of

materials and work measurements. Standard cost estimates establish standard prices for semi-finished and finished products. Standard values are used in costing, scheduling, and capacity

planning to calculate costs, execution times, and capacity requirements.