Aggregate inventory management refers to a basic inventory management method that groups items categories, namely, raw materials, work-in-process, and finished goods. It is also referred to as Aggregate inventory control; it manages multiple individual items under each category.
Aggregate control is more concerned with the cost and benefits of carrying each class of inventory. For example, the raw materials for a Table/Sofa manufacturer consist of Cloth, wood, screws, varnish, paint, and uncut leather. Work-in-process for this same company might consist of assembled tables without paint or varnish and sofa frames that still require foam and upholstery. The company controls these items with a different set of parameters. Completed items ready to sell make up the company’s finished goods products. The company controls finished goods based on the category’s supply and demand patterns. The control measures on the raw materials are based on their inventory costs.