What does FIFO stand for in inventory management?

FIFO stands for First In First Out in inventory management. This method emphasizes that the oldest inventory items or materials are the ones that should be sold or used first. This practice is particularly important in industries that deal with perishable goods or products that have a shelf life, as it helps to minimize waste and ensure that products are sold while they are still fresh or usable.

By utilizing FIFO, businesses can maintain a more efficient inventory system, as it allows for better tracking of inventory costs and helps to ensure that older stock is not left to expire or become obsolete. Many organizations adopt this method to enhance customer satisfaction and improve overall operational efficiency, as it aligns inventory management closely with the principles of quality control and turnover.