FIFO vs LIFO

Both FIFO and LIFO are beneficial and the most popular types of inventory management. These methods have made it quite easier to maintain the stock and to sell them as per the company's preferences and business niche. FIFO stands for First in First Out, while LIFO is known as Last in First Out. In the FIFO method, the goods that are purchased first are sold first. It is ensured that no previous stock remains in the stock. Hence, businessmen consider selling the old stock first.

While the LIFO method is entirely opposite to it, in such an inventory method, the newly purchased stock is sold first. Here, the products or goods that are most recent are given the prime importance of selling because of the cases of price fluctuation. However, FIFO is primarily focused and preferred by many businessmen as it is a trusted and highly transparent method for running business and selling products effectively.

FIFO and LIFO Examples:

The concept of FIFO and LIFO cannot be cleared until you have an idea about examples of it.

• FIFO method is utilized where there are chances of product deterioration or product damage. 
• In addition to this, it is considered a preferred inventory management method where prices of the product do not fluctuate quite commonly and stay stable for longer. 

Real-Life Example:

For instance, in the case of pharmaceuticals where medicines are being sold on the basis of first in first out. Medicines purchased first and sold fist.

While in the LIFO method, the chances of price fluctuation are quite frequent. Here, the businessmen have to sell the products on the basis of the recent stock. For instance, it is the most commonly adopted method in electronic companies, oil companies, etc. New models of gadgets are introduced in the market for which people demand the most. You would be glad to know that inventory management software is also available online for your ease.