The goods that drive our consumer marketplace are usually divided into three broad categories: final goods, intermediate goods, and capital goods.
Final goods, also called consumption goods or finished goods, are items that we buy to use or consume directly. Intermediate goods are things that become part of final goods, including raw materials. Capital goods are fixed inputs that contribute to the production of other goods.
Intermediate goods are often traded between industries as a part of the final product, giving them the alternate names "producer goods" and “semi-finished products.” For manufacturers, these products are the essential ingredients in creating the items they will eventually sell to consumers.
Considering that intermediate goods are such a vital part of the inventory management cycle, it’s good to understand these items and how they differ from other goods.