The oldest inventory items are used or sold first according to the FIFO method of inventory valuation and rotation. For perishable goods, like food or medications, where older items must be used up before they expire, this strategy is particularly crucial. FIFO guarantees inventory freshness and helps cut waste. From an accounting standpoint, FIFO may lead to a lower cost of goods sold (COGS) and a higher taxable income during inflationary times. Operationally, FIFO promotes improved inventory turnover and is consistent with accepted warehousing practices that place an emphasis on effective stock rotation.
