Final answer:
Direct materials and indirect materials are included in the raw materials inventory. In-process inventory is also part of the raw materials inventory until it becomes a finished product.
Step-by-step explanation:
The raw materials inventory is a key concept in business and supply chain management. It refers to the materials that are used in the manufacturing process or to create a final product. Direct materials are included in the raw materials inventory as they are the primary materials used in the production process. Examples of direct materials include wood, steel, plastic, and fabric. Indirect materials are also included in the raw materials inventory. These materials are necessary for production but are not directly incorporated into the end product. Examples of indirect materials include lubricants, cleaning supplies, and safety equipment.
In-process inventory, on the other hand, refers to partially completed products that are still undergoing production. They have not yet become finished goods and are considered part of the raw materials inventory until they are fully completed. Finished goods are not included in the raw materials inventory, as they are the final products that are ready for sale or distribution.