Final answer:
The term 'Material' in an organization includes all items that an organization uses, buys, makes, stores, or sells, which are essential components of both the organization's supply chain and production process.
Step-by-step explanation:
The term 'Material' in an organization encompasses all the products, components, parts, etc. that an organization uses–makes, buys, stores, and sells. This broad definition includes tangible items such as raw materials, work-in-progress goods, and finished products. Materials are a crucial part of an organization's supply chain, contributing to the production process and ultimately determining the quality and value of the final product. For instance, while the physical materials like plastic parts and wiring in computers may represent a smaller portion of the total value compared to the technology and ideas, they are still essential components.
In the context of production, materials serve as one of the factors of production, which can also include labor, capital, and land. As inputs into the production process, materials are transformed into outputs, which, if managed effectively, are more valuable than the sum of the inputs. This transformation from material to finished product is the core of manufacturing and all business activities.
Understanding the nature of materials also requires a basic knowledge of matter, which is made up of atoms. Matter is the substance that constitutes the physical world, including all objects and structures, and is classified into mixtures or pure substances. Organizations deal with various types of matter in their operations, utilizing both durable and nondurable goods to create and manage their inventory.