The FIFO (First in - First Out) and LIFO (Last in - First Out) methods are widely used in warehouse management, they are two inventory management systems for merchandise management widely used in a warehouse. They are methods that have to do with how the products that are assumed to be sold are recorded in the stock management of a warehouse. Although their acronyms may connote a similar meaning and therefore management, they are actually opposite inventory management methods.
In this note we detail the meaning of FIFO and LIFO with examples of use for each type of merchandise.
The FIFO method is a method used in accounting and means "first in, first out" (First in - First Out), while the LIFO method of accounting means "last in, first out" LIFO (Last in - First Out). Out). They are the most widely used methods in accounting systems for warehouse management and merchandise load management, they are related to the way in which products are registered, how they are tracked to be labeled as sold.
FIFO method
FIFO de su sigla del inglés "First In - First Out", en español "Primero entrar, primero en salir". La definición del método FIFO se refiere al lote de stock o mercancía primero en entrar, es la primera en salir. El método FIFO es utilizado con mayor frecuencia para los productos perecederos como son los alimentos y medicamentos los cuales tienen fecha de caducidad. El método FIFO se utiliza tanto en operadores logísticos que prestan servicio de almacenaje, almacenes, supermercados y farmacias. Un ejemplo de implementación del método FIFO es la leche en un supermercado la cual tiene fecha de caducidad con lo cual la leche y productos lácteos son los primeros que tienen que entrar y deben ser los primeros en salir. Los almacenes y mostradores deben tener a primera vista los productos primero entrar para que tengan una salida mucho más rápida debido a su fecha de caducidad. Con la implementación del método FIFO la empresa asegura la correcta rotación de mercancías y evitar así su vencimiento.
LIFO method
LIFO from its acronym in English "Last in - Last Out", in Spanish "Last to enter, last to leave". The LIFO accounting and stock management method, unlike the FIFO system, is used for non-perishable warehouse products. The LIFO method is used in the stock of products that can be stacked, stored on shelves using a pallet racking system or similar in order to be able to access them easily through their labelling. Labeling in warehouse management must have a code for each product; in LIFO systems, labeling usually has a specific code for the location of the product within the company's warehouse.
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