What do you do with loot while grinding?

[Fantasy]

Well, when you're grinding, killing monsters for quest, etc etc. What do you do with the loot and is it effective.

1. NPC all the drops(fast and quick but low ammounts of money)
2. Vendor the drops(slower and a bit more money)
3. Use loots for production skills and sell(making elrues,lix,xir,potions,scrolls and
selling.)
4. Use loots for production skills then use the items(upgrading armor\weps, using
potions and scrolls to grind faster.)
5. Other(please specify if i didn't mention)