What are the types of good inventory?
There are various inventory methods, which are used depending on the chosen storage solution. A distinction is made between:
Last In First Out (LIFO)
First In First Out (FIFO)
First Expired First Out (FEFO)
Highest In First Out (HIFO)
Lowest In First Out (LOFO)
What is the difference between Last In First Out (LIFO) and First In First Out (FIFO)?
With the First In First Out (FIFO) method, the finished products that have been stored first are retrieved first. The FIFO method is also often referred to as the consumption sequence method. The advantage is that the oldest products are removed from storage first. The FIFO method is mainly used for perishable goods, which cannot be stored indefinitely due to the best-before date.
In the Last In First Out (LIFO) method, products leave the warehouse first, which have been stored last. The LIFO method is mainly used in retail and is particularly suitable for non-perishable products without an expiration date.
Both the FIFO method and the LIFO method can be used for inventory valuation, as they are permitted under tax law.
An extension of the FIFO method is the First Expired First Out (FEFO) method, which also takes the expiration date of the products into account. Here, the products that have the shortest best-before date are removed from stock first. This method is mainly used in the food industry.