The nature of Raw Material used in the manufacture of finished goods greatly influences the quantum of Raw Material Inventory. For example, if the raw Material is an agricultural product whose availability is pronounce seasonal in character, the proportion of Raw Material Inventory to Finished Goods Inventory will be quite high.
Similarly companies using Imported Raw Materials with long lead time tend to have a high proportion of Raw Material Inventory. In the case of Capital Goods Manufacturing Company the demand for whose product is growing over time, the tendency will be to have high Inventory of Raw Material and Components.
