diff --git a/pkg/apply/applier.go b/pkg/apply/applier.go
index ba411ea..86d2224 100644
--- a/pkg/apply/applier.go
+++ b/pkg/apply/applier.go
@@ -275,6 +275,9 @@ type Options struct {
 	// to be fully deleted after pruning, and if so, how long we should
 	// wait.
 	PruneTimeout time.Duration
+
+	// InventoryPolicy defines the inventory policy of apply.
+	InventoryPolicy inventory.InventoryPolicy
 }
 
 // setDefaults set the options to the default values if they
diff --git a/pkg/apply/prune/prune.go b/pkg/apply/prune/prune.go
index 3ea68f6..abe05fb 100644
--- a/pkg/apply/prune/prune.go
+++ b/pkg/apply/prune/prune.go
@@ -76,6 +76,9 @@ type Options struct {
 	DryRunStrategy common.DryRunStrategy
 
 	PropagationPolicy metav1.DeletionPropagation
+
+	// InventoryPolicy defines the inventory policy of prune.
+	InventoryPolicy inventory.InventoryPolicy
 }
 
 // Prune deletes the set of resources which were previously applied
diff --git a/pkg/inventory/policy.go b/pkg/inventory/policy.go
new file mode 100644
index 0000000..0601076
--- /dev/null
+++ b/pkg/inventory/policy.go
@@ -0,0 +1,58 @@
+// Copyright 2019 The Kubernetes Authors.
+// SPDX-License-Identifier: Apache-2.0
+
+package inventory
+
+// InventoryPolicy defines if an inventory object can take over
+// objects that belong to another inventory object or don't
+// belong to any inventory object.
+// This is done by determining if the apply/prune operation
+// can go through for a resource based on the comparison
+// the inventory-d annotation value in the package and that
+// in the live object.
+type InventoryPolicy int
+
+const (
+	// InvnetoryPolicyMustMatch: This policy enforces that the resources being applied can not
+	// have any overlap with objects in other inventories or objects that already exist
+	// in the cluster but don't belong to an inventory.
+	//
+	// The apply operation can go through when
+	// - A new resources in the package doesn't exist in the cluster
+	// - An existing resource in the package doesn't exist in the cluster
+	// - An existing resource exist in the cluster. The inventory-id annotation in the live object
+	//   matches with that in the package.
+	//
+	// The prune operation can go through when
+	// - The inventory-id annotation in the live object match with that
+	//   in the package.
+	InventoryPolicyMustMatch InventoryPolicy = iota
+
+	// AdoptIfNoInventory: This policy enforces that resources being applied
+	// can not have any overlap with objects in other inventories, but are
+	// permitted to take ownership of objects that don't belong to any inventories.
+	//
+	// The apply operation can go through when
+	// - New resource in the package doesn't exist in the cluster
+	// - If a new resource exist in the cluster, its inventory-id annotation is empty
+	// - Existing resource in the package doesn't exist in the cluster
+	// - If existing resource exist in the cluster, its inventory-id annotation in the live object
+	//   is empty
+	// - An existing resource exist in the cluster. The inventory-id annotation in the live object
+	//   matches with that in the package.
+	//
+	// The prune operation can go through when
+	// - The inventory-id annotation in the live object match with that
+	//   in the package.
+	AdoptIfNoInventory
+
+	// AdoptAll: This policy will let the current inventory take ownership of any objects.
+	//
+	// The apply operation can go through for any resource in the package even if the
+	// live object has an unmatched inventory-id annotation.
+	//
+	// The prune operation can go through when
+	// - The inventory-id annotation in the live object match with that
+	//   in the package.
+	AdoptAll
+)