Inventory analysis involves data collection and calculation procedures to quantify the relevant inputs and outputs of a product system. The data collection can be a resource intensive process. For each unit process that is included within the systems boundaries the relevant inputs and outputs, such as use of resources and releases to air, water and land associated with the system, need to be considered. Interpretation may be drawn from these data, depending on the goal and scope of the LCA. These data also constitute the input to the LCIA (ISO 14040 1997) (Fig. 11.4).

A system model thus needs to be built according to the requirements of the goal and scope definition. The systems model is the flow model for a technical system with certain types of system boundaries (e. g. ‘cradle-to-grave’ or ‘cradle-to-gate’).

The process of conducting an inventory analysis is iterative. As data are collected and more is learned about the system, new data requirements or limitations may be identified that require a change in the data-collection procedures so that the goals of the study are still met. Sometimes, issues may be identified that require revisions to the goal or scope of the study.

The result is an incomplete mass and energy balance for the system. It is incomplete in the sense that only the environmental relevant flows are considered, which more or less include the use of scarce resources and the emissions of substances considered harmful. Environmentally indifferent flows such as water vapour emissions from combustion or industrial surplus heat are disregarded. Figure 11.4, below, is an illustration of the main steps and flows involved in an LCA.

When dealing with systems involving multiple products, allocation methods are needed. The materials and energy flows as well as associated emissions need to be allocated to the different products according to justifiable, clearly stated and well documented procedures. The allocation method can be, based on a unit of mass or energy, or in some instances on the financial value of the products.