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Does the Type field on the Stock Items (IN202500) screen have functionality tied to it?
You can see the Type field pictured below. The possible values are Finished Good, Component Part, and Subassembly.
It sure seems like the selection you make (Finished Good, Component Part, or Subassembly) would affect whether or not you can produce this item on a Work Order or require it as Raw Material on a Work Order.
But the Type field has no functionality tied to it. It's for reference only. So it still makes sense to populate the field intelligently for reporting purposes. But your selection here will not impact what kinds of things you are able to do with the Item down the road.