Last In / First Out (LIFO) is an inventory management method where the most recently received stock is used or sold first. In logistics and accounting, LIFO is used to manage inventory costs, particularly for products with fluctuating prices. While LIFO can reduce tax liability in some regions, it requires careful tracking to prevent older inventory from becoming obsolete or expired. LIFO is commonly used in industries where products are non-perishable or where stock rotation is not critical.
Characteristics:
- Uses the most recently received inventory first
- Helps manage inventory costs under fluctuating prices
- Reduces potential tax liability in certain regions
- Requires accurate inventory tracking and recording
- May increase risk of older inventory obsolescence
- Suitable for non-perishable or durable goods
- Supports financial and operational inventory strategies
- Requires systematic stock rotation monitoring
