Question

What do you call the average total value of all items held in inventory for a firm, at cost?

Short answer

Average aggregate inventory value.

Step-by-step solution

Average aggregate inventory value

The term "average aggregate inventory value" refers to the total cost of all inventory held in stock, including raw materials, work in progress, and finished commodities.

Aggregate inventory management is a fundamental inventory management technique that organizes products into three categories: raw materials, work-in-process, and finished goods. Aggregate inventory control is another name for it; it maintains several individual products under each category.

Processes benefit from aggregate inventory management

The entire average worth of all products held in inventory by a company is known as the average aggregate inventory value. Because we can then total the values of individual items in raw materials, work-in-process, and finished goods, we express the dollar values in this inventory measure at cost.

Final sales dollars are only good for final services or products, and they cannot be applied to all inventory items. Because it usually represents the inventory investment over a while.

The following processes can benefit from Aggregate Inventory Management

1. Calculating the cost of inventory by category
2. Supply and demand matching
3. Choosing the types of inventory to store
4. Defining inventory goals and policies