First In, First Out (FIFO)

First In, First Out (FIFO) is an Inventory management and accounting method where the first items added to Inventory are the first ones to be sold or used. This approach ensures that older Stock is utilized before newer Stock, helping to manage Inventory levels, reduce spoilage, and maintain product freshness.

Examples:

• In a grocery store, perishable items like fruits and vegetables are typically organized so that older products are at the front and sold first.
• A manufacturing company uses FIFO to manage raw materials, ensuring that the oldest materials are processed before newer deliveries.

Cases:

• Food Industry: Restaurants often employ FIFO to minimize food waste and ensure that ingredients are used while still fresh.
• Retail: Electronics retailers may use FIFO for items like batteries, ensuring older Stock is sold before newer models are introduced.