Category File Maintenance is used to establish various categories of inventory (such as lumber, concrete, nails and screws, paint). After categories are established, individual items will be entered and placed within the appropriate category Inventory Items.

The inventory categories may be based on First-In-First-Out (FIFO), Last-In-First-Out (LIFO) or Average Cost; the costing method will be used at the time of sale to determine the cost of goods sold. Most companies establish a single costing method across all categories, different costing methods on the various categories is used. As there are many uses for inventory departments, it bears early consideration for best operating results. Possible category schemes may include vendor product lines, product types or other common traits.