Last In, First Out (LIFO) is a stock management method where the newest stock (the last in) is used or sold first (the first out). It’s the opposite of FIFO and is less common in industries dealing with perishable goods.
Why LIFO Is Used
LIFO can make sense in some situations, especially where:
- Products don’t expire or lose value over time
- The newest stock is easier to reach or more relevant
- Businesses want to match recent costs to current prices (often in accounting)
Where It’s Used
- Construction materials: Where newer batches may be easier to access
- Certain manufacturing: If newer components need to be used first
- Accounting: Some businesses use LIFO to manage stock costs during inflation
Example
If a warehouse receives 200 boxes in March and another 200 in April, the April stock is sent out first under the LIFO method.