Industrial goods can be classified as __, capital items, or suppliers and business services based on their costliness and how they enter the production process.
a. service components
b. subassemblies
c. pieces and parts
d. specialty goods
e. materials and parts
The Correct Answer and Explanation is :
The correct answer is e. materials and parts.
Industrial goods can be classified into categories based on their costliness and how they enter the production process. These categories typically include materials and parts, capital items, and suppliers and business services. Here is a breakdown of the classification:
- Materials and Parts: This category includes raw materials and components that are used directly in the manufacturing of products. These are typically classified as direct materials or parts that become part of the final product. For instance, steel, plastic, or screws used in the assembly of a product would fall into this category. These goods are relatively low in cost compared to capital items, and they are essential for the production process, becoming part of the final product without undergoing further processing.
- Capital Items: Capital items are typically more expensive and include major assets that aid in the production of goods but are not part of the final product. These might include machinery, buildings, tools, and other equipment that have a longer lifespan and are not consumed directly in the manufacturing process. Capital items are vital for the production infrastructure and tend to be long-term investments for the company.
- Suppliers and Business Services: This category refers to the goods and services needed to support production but do not become part of the product itself. These include services like maintenance, repair, consulting, and business supplies that help keep the production process running smoothly.
Understanding these classifications is essential for businesses when making purchasing decisions and managing supply chains. The goods within each category serve different roles in the production process, and the costs associated with each can vary greatly. Materials and parts are essential for direct product creation, while capital items support the production infrastructure and are often long-term investments, and suppliers and business services help maintain the business operations.