Glossary: Production and Inventory

The floor-and-warehouse vocabulary — lots, recipes, stock rotation, and the inventory numbers that keep your records matching what is on the racks.

~5 min

This is the vocabulary of the floor and the warehouse — the lots you make, the recipes behind them, the way stock moves and rotates through the building, and the numbers that keep your records matching what is actually on the racks. Each term is defined here in plain language, at the altitude of someone running a small plant.

Lots and traceability

Lot / Batch — A quantity of product made together under the same conditions and tracked under one code, so every unit can be found and pulled later. FDA's manufacturing rule defines a lot as the food produced during a period of time and identified by an establishment's specific code (21 CFR 117.3); it does not define batch separately, and on the floor most operations use batch for the output of a single production run and treat the two words as the same thing.
Lot Genealogy — The full chain of a product's history: which raw-material lots went into which batch, and which batch went out on which shipment. It is what turns a pile of lot numbers into a real trace — forward from an ingredient to every customer, backward from a finished unit to every supplier.
Mass Balance — Proving the quantities add up: for a given input lot, the amount received should equal what went into finished product, plus what is still in stock, plus documented waste. Auditors run this reconciliation to test whether your traceability records actually hold together.
COA (Certificate of Analysis) — The document a supplier sends with a lot certifying it was tested and meets the agreed spec — moisture, pathogen results, allergen status, potency. You check it on receipt to decide whether to accept the lot, and you keep it as the evidence behind that decision.

Rotation, holds, and dating

FIFO (First In, First Out) — Rotating stock so the oldest inventory ships or gets used first. It keeps material moving in the order it arrived and stops old stock from being buried behind new.
FEFO (First Expired, First Out) — Rotating by expiry date rather than arrival date, so whatever expires soonest goes first. For anything with a shelf life it beats FIFO, because the lot received earliest is not always the one that expires earliest.
Shelf Life / Expiry — How long a product stays at acceptable quality, and the date that marks the edge of it. Worth knowing: except for infant formula, U.S. law sets no federal rule requiring a date on packaged food, and "best by," "use by," and "sell by" dates signal quality, not safety — you set and defend your own shelf life from testing (USDA FSIS on product dating, verified July 2026).
QA Hold / Release — Putting product in a locked, do-not-ship state until quality confirms it is good — pending a lab result, an investigation, or a paperwork check — then formally releasing it once it clears. A hold is what keeps suspect or unverified stock from leaving the building by accident.

The recipe and the batch

BOM (Bill of Materials) — The full list of every ingredient and packaging component, with quantities, that goes into one unit or one batch of a product. It is the parts list a batch is built from, and the backbone of both purchasing and costing.
Recipe / Formulation — The instructions and proportions for making a product. Recipe is the kitchen word; formulation is the same thing said with more precision — exact quantities, often by percentage, that scale cleanly from a test batch to a full production run.
UOM (Unit of Measure) — The unit a material is counted in: pounds, kilograms, liters, cases, each. Trouble starts when the unit you buy in differs from the unit you make in or sell in, so a clean operation defines every material's units and the conversions between them.
Yield — How much finished product a batch actually gives you against how much the recipe says it should. Yield below plan means material is going somewhere — evaporation, spillage, trim, rework — and it moves your real cost per unit.
WIP (Work in Process) — Material that has left raw storage but is not yet finished goods: mixed, cooking, cooling, waiting to be packed. It is real inventory with real value, and easy to lose track of because it lives between the two places you usually count.
Shrink / Waste — The gap between the inventory your records claim and what is actually there — lost to spoilage, spills, trim, theft, or miscounts. Every unit of shrink is cost you already paid for and cannot sell, which is why it belongs in your true cost rather than hidden inside it.

Buying and stocking

Reorder Point — The on-hand quantity that triggers a new purchase, set so stock lasts through the supplier's lead time without running out. Hit the reorder point, place the order.
Safety Stock — The cushion of extra inventory you hold on top of expected demand to absorb the surprises — a late delivery, a demand spike, a short shipment. It is the buffer that keeps a normal hiccup from becoming a stockout.
Lead Time — The stretch between placing an order and having the material on your dock, usable. Underestimate it and you run out before the replacement lands; it is the number your reorder point and safety stock are built around.
Landed Cost — The true, all-in cost of a material once it reaches you: the purchase price plus freight, duties, and handling. Using it instead of the sticker price is what makes your COGS honest, because it is what the material actually cost you to have on hand.

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Lots and traceability

Lot / Batch — A quantity of product made together under the same conditions and tracked under one code, so every unit can be found and pulled later. FDA's manufacturing rule defines a lot as the food produced during a period of time and identified by an establishment's specific code (21 CFR 117.3); it does not define batch separately, and on the floor most operations use batch for the output of a single production run and treat the two words as the same thing.

Lot Genealogy — The full chain of a product's history: which raw-material lots went into which batch, and which batch went out on which shipment. It is what turns a pile of lot numbers into a real trace — forward from an ingredient to every customer, backward from a finished unit to every supplier.

Mass Balance — Proving the quantities add up: for a given input lot, the amount received should equal what went into finished product, plus what is still in stock, plus documented waste. Auditors run this reconciliation to test whether your traceability records actually hold together.

COA (Certificate of Analysis) — The document a supplier sends with a lot certifying it was tested and meets the agreed spec — moisture, pathogen results, allergen status, potency. You check it on receipt to decide whether to accept the lot, and you keep it as the evidence behind that decision.

Rotation, holds, and dating

FIFO (First In, First Out) — Rotating stock so the oldest inventory ships or gets used first. It keeps material moving in the order it arrived and stops old stock from being buried behind new.

FEFO (First Expired, First Out) — Rotating by expiry date rather than arrival date, so whatever expires soonest goes first. For anything with a shelf life it beats FIFO, because the lot received earliest is not always the one that expires earliest.

Shelf Life / Expiry — How long a product stays at acceptable quality, and the date that marks the edge of it. Worth knowing: except for infant formula, U.S. law sets no federal rule requiring a date on packaged food, and "best by," "use by," and "sell by" dates signal quality, not safety — you set and defend your own shelf life from testing (USDA FSIS on product dating, verified July 2026).

QA Hold / Release — Putting product in a locked, do-not-ship state until quality confirms it is good — pending a lab result, an investigation, or a paperwork check — then formally releasing it once it clears. A hold is what keeps suspect or unverified stock from leaving the building by accident.

The recipe and the batch

BOM (Bill of Materials) — The full list of every ingredient and packaging component, with quantities, that goes into one unit or one batch of a product. It is the parts list a batch is built from, and the backbone of both purchasing and costing.

Recipe / Formulation — The instructions and proportions for making a product. Recipe is the kitchen word; formulation is the same thing said with more precision — exact quantities, often by percentage, that scale cleanly from a test batch to a full production run.

UOM (Unit of Measure) — The unit a material is counted in: pounds, kilograms, liters, cases, each. Trouble starts when the unit you buy in differs from the unit you make in or sell in, so a clean operation defines every material's units and the conversions between them.

Yield — How much finished product a batch actually gives you against how much the recipe says it should. Yield below plan means material is going somewhere — evaporation, spillage, trim, rework — and it moves your real cost per unit.

WIP (Work in Process) — Material that has left raw storage but is not yet finished goods: mixed, cooking, cooling, waiting to be packed. It is real inventory with real value, and easy to lose track of because it lives between the two places you usually count.

Shrink / Waste — The gap between the inventory your records claim and what is actually there — lost to spoilage, spills, trim, theft, or miscounts. Every unit of shrink is cost you already paid for and cannot sell, which is why it belongs in your true cost rather than hidden inside it.

Buying and stocking

Reorder Point — The on-hand quantity that triggers a new purchase, set so stock lasts through the supplier's lead time without running out. Hit the reorder point, place the order.

Safety Stock — The cushion of extra inventory you hold on top of expected demand to absorb the surprises — a late delivery, a demand spike, a short shipment. It is the buffer that keeps a normal hiccup from becoming a stockout.

Lead Time — The stretch between placing an order and having the material on your dock, usable. Underestimate it and you run out before the replacement lands; it is the number your reorder point and safety stock are built around.

Landed Cost — The true, all-in cost of a material once it reaches you: the purchase price plus freight, duties, and handling. Using it instead of the sticker price is what makes your COGS honest, because it is what the material actually cost you to have on hand.