The purpose of WIP is to give each stage of a production system some degree of independent action. Work-in-process (WIP) inventory exists in production systems where different types of raw materials are processed into finished products. Also, it exists as buffer between two work stations if the output of a work station is transferred in batches to the next work station. Two work stations in series without intervening WIP must perfectly synchronized to operate effectively.
Work-In-Process inventory has been given the least consideration. There are two conceivable reasons for this. First, the dollar value of the WIP inventory is relatively small compared to raw materials and finished products.
Second, it is difficult to analyze the WIP inventory because of its complex relation with production scheduling.
The objective of work-in-process (WIP) inventory is to smooth and balance the work flow of operations (decouple operations) in a production system which results in systems performance enhancement. However, increasing the buffer size would result in more space requirement and more inventory holding costs.
Work-In-Process inventory
