Inventory Terminology - ITIQPro Documentation

Inventory

Terminology

A EAM/CMMS biased view of Inventory Terminology

The author of this chart (and owner of the company) has been working with inventory systems since his teens in the 1970's when he became manager of the summer department at a large department store. This is hopefully useful, especially in the CMMS/EAM world. To report errors, items that would have helped you if included, suggestions for improving our docs, please send them to support@MaintenanceConnection.ca, ideally with a screen shot of where the document is in the tree. If you want to be acknowledged we are happy to do that - tell us how you would like to be referenced.

Term	Meaning	Other comments
ABC analysis	A: High value, High importance, B: Moderate value and importance. C: Low value and importance. This requires human judgement, consider: A part that cost pennies, but people will die if you run out of it. Or consider a part which costs a lot, but it is quick and easy to order a new one if you run out.
Allocated	The amount of inventory that is spoken for, such as for a specific work order.
Available	The quantity on hand minus quantities reserved for other purposes	This can easily be negative. A negative amount means that all of the stock on hand is spoken for (reserved) and some of the future stock is pre-allocated
Average Cost	AKA Weighted Average Cost. Products come in at their then current price. Value of inventory is total of the costs they came in at/number of times.	The are costed on the way out at the current average cost.
Backorder	Product you ordered but wasn't in stock at the time the shipment was made.
Batch Number	Identifier for a group of items received or produced together for tracking.	Useful for traceability in recalls or maintenance tracking, often linked with expiry dates.
Bin	Specific shelf, slot, or storage position within a location (stockroom) where inventory items are physically stored.	Bins help identify the exact position of parts within a stockroom, improving picking and counting accuracy.
Carrying Cost	Cost of storing inventory including storage, insurance, depreciation, and capital cost.	Shows financial impact of excess stock and helps justify reorder levels.
COGS	Cost of Goods sold
Cycle Counting	Counting a part of your inventory, perhaps monthly, so that everything is counted over time.	You may prioritize high turnover stock and count it more often since it is more likely to have problems like shrinkage.
Days inventory Outstanding	How many days, on average, the current stock, or some fictious amount of stock, will last based on the average consumption.
DIO	See Days Inventory Outstanding
Deadstock	Inventory that is damaged or old/obsolete or in some way is unlikely to ever be sold.	I thought my 3.5" floppies were deadstock for a decade until a Japanese company bought them in 2025. Of course TV shows will tell you how, if you hold on to them long enough, deadstock today becomes valuable antiques tomorrow, of course the reality is the cost of storing or selling them cheap now has higher future value usually than holding on to it.
EOQ	Economic Order Quantity
Economic Order Quantity
FIFO	First in First out	A method of calculating current inventory value. Conceptually this would be used for items with a shelf life - use the oldest first. FIFO is globally accepted.
FOB	Freight On Board	Needs to be combined with a location or a description of a location such as 'Destination'. They belong to the seller's inventory until the location is reached. They belong to the buyer's inventory until the location is reached. Risk for loss or damage and shipping costs remain with the seller until it reaches the FOB point. Risk for loss and damage and shipping becomes the buyer's responsibility upon reaching the FOB point.
FOB Destination	Ownership and risk transfer to the buyer the instant the goods arrive at the buyer's location, so it excludes loss or damage in shipping and excludes shipping costs	In practical terms, many sellers may use FOB Destination, but they remove the items from inventory when they leave, and would use RMA or similar to put them back into inventory if problems occur.
FOB Origin	Synonym for FOB shipping point
FOB Shipping Point	Ownership and risk transfer to the buyer the instant the goods are shipped from the location of the seller - including loss or damage in shipping and shipping costs.
GAAP	Generally Agreed Accounting Principles
Inventory turnover	The number of times, on average, you sell the entire inventory in a period.	Typically the formula used is "CofG sold"/"average inventory
Inspection	Inventory flagged as pending quality check before use.	Critical for safety or regulated items, ensures only approved items are issued.
Issue / Issuing	Process of taking inventory out of the stockroom for use in maintenance or operations.	Always track issued quantities, unrecorded issues create discrepancies in inventory counts.
Inventory Valuation	Method to calculate financial value of stock for accounting and reporting purposes.	Helps users understand replacement cost, budget planning, and asset valuation.
JIT	Just in time. A strategy where the goal is to have inventory arrive exactly when you need it, or with the least amount of lead time possible.
Last Cost	Last Cost	A method of calculating the cost of inventory for business purposes not for tax purposes.
Lead time
LIFO	Last in First out	A method of calculating current inventory value. Conceptually this would be used for items that are thrown in a heap - you grab the ones on top first. LIFO is usually permitted in Canada and USA under GAAP
- Location	Primary inventory storage area where parts and supplies are stored and managed within the system.	A location typically represents the stockroom where inventory items are maintained and issued.
On-Hand	The quantity on hand or on-hand is the amount that is physically present, be it out front or out back in the stock room and any areas you consider an extension of the stock room.	In theory this can never be negative.
Landed Cost	Total cost of a product including shipping, taxes (including tariffs), customs charges, insurance, crating, handling.
Manual cost	A cost picked by a human, possibly looking at previous costs and expected costs.	A method of calculating the cost of inventory especially for use. For business purposes, not for tax purposes.
On-Order / Pending	Inventory that has been ordered but has not yet arrived in the stockroom.	Helps plan work orders, prevents stockouts by showing items that are expected soon.
Overage	The amount you have in excess of what your system says you have.
Plug On Hand	This might be a made up by ChatGPT term	Seems to suggest things like 'lids' or 'stir sticks for cans of paint' or 'parts that are NOT counted that belong to another item.
Purchase Requisition	Formal request for inventory from stockroom or supplier for upcoming work orders.	Ensures proper approvals and helps prevent over-ordering or stock shortages in workflows.
Receipt / Receiving	Adding newly purchased or returned items into the stockroom to update inventory levels.	Proper receipt ensures inventory accuracy.
Reorder Point	The point at which inventory should be reordered for this part
Repair Center	Department or facility responsible for performing repairs and maintenance on assets or equipment. Also used as a security filter.	Repair centers typically use inventory parts from stockrooms when performing maintenance or repairing assets.
Replacement Cost	Current cost to replace inventory items, used for budgeting and financial planning	Important for planning spare part purchases and forecasting maintenance expenses.
RMA	Return Merchandise Authorization (I have heard some people call it: Return to Manufacturer Authorization) It is usually a number or string, perhaps encoded in a barcode, that is used by the seller to find the authorization for a returned item.	Typically a buyer initiates a 'return' action, if approved the seller issues an RMA, then the customer returns the product with the RMA noted, or perhaps a barcode label attached to the package.
ROP	Abbreviation for Reorder Point
Safety stock	The extra inventory that is kept on hand for the part to reduce the costs, direct or indirect, caused by being out of stock and waiting for more to arrive.	When shortages of an item are expect, like in 2026, rare earth magnets, companies may increase the safety stock significantly.
Serial Number	Unique identifier assigned to an individual inventory item to track its identity, usage, and service history. Serialized parts can also be found in the asset tree.	Key for high-value or critical items, allowing detailed tracking of repairs, warranties, and lifecycle history.
Shrinkage	Both a descriptive term (think products that shrink as they dry out) and a euphemism for staff and other theft.	See also overage.
SKU	Your ID (or your supplier's ID) for the product. 'Stock Keeping Unit" typically pronounced "Skew"
Stockroom	The the location or storage area where parts or inventory items are kept. It’s used when you issue, receive, or track items. Think of it as a “warehouse” inside the system.	General storage for available inventory.
Weighted Average Cost	Synonym for Average Cost
Write-Off	Accounting adjustment to remove damaged, lost, or obsolete inventory from financial records.	Often applied to obsolete spare parts or expired materials.