Can You Explain How Having More Work In Process Inventory Can Improve The Efficiency Of A Process. How Can The Be Bad?


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d ds Profile
d ds answered
Work in process inventory is the inventory of goods that are in the process of completion but are not finished yet and this can be harmful and beneficial as well. It improves the efficiency of the process because you know that I have this number of goods in process and I will get them ready by a certain time. This means that when ever you get an order from a customer you can tell him that you will provide him the goods much quickly than other firms can. This is because you already have semi finished goods and can convert them into goods quickly thereby increasing the efficiency. It can be harmful because you will need a lot of space to store these semi finished goods and you are still not sure what the final cost of producing the good will be. It also means that you have lesser finished items on hand and more in process and may signal that may be the company is not efficient as it is taking so much time to make the finished goods.
Oddman Profile
Oddman answered
If a process is a bottleneck preventing shipment of more product to paying customers, making sure that it is not waiting for work would be a priority. Efficiency can be improved by having enough pending work to make sure the bottleneck process is never "starved."

Anywhere else in the plant, WIP ties up working capital to no positive bottom-line effect. It also masks process problems that cause rework, adds to handling costs, and raises the general level of chaos in the factory.

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