1st in 1st out

1st in 1st out (FIFO) is an inventory management method in which the first items placed into inventory are the first ones to be sold or used. This approach ensures that products are sold in the order in which they were received, which is especially important for perishable goods or items with expiration dates. FIFO helps businesses maintain product freshness and avoid obsolete inventory. For companies dealing with large amounts of inventory, FIFO can simplify accounting and inventory control by aligning with common practices of inventory valuation, such as using the “first cost” method. Adopting FIFO also helps reduce the risk of financial losses due to inventory becoming unsellable.