FIFO picking: oldest receipt first
Useful for rotating non-expiring stock. Choose the oldest eligible receipt, while respecting reservations, quality holds and warehouse availability.
INVENTORY GUIDE
FIFO, FEFO & inventory costing
Move the right stock first. Understand its cost. Reduce aging stock, expiry losses and unexplained margins.
Discuss your inventory process
Two decisions: what to pick and how to cost it
FEFO picking: earliest expiry first
For dated products such as food and medicine, compare expiry dates rather than receipt dates. Exclude expired or blocked batches and meet the customer's minimum remaining shelf life.
Costing: how value is assigned
FIFO costing consumes older cost layers first. Weighted average uses an average cost. These accounting methods are separate from physical picking: FEFO picking can coexist with either method. Agree a consistent policy with your accountant.
For unique, individually tracked goods, discuss specific identification costing. No single method suits every business.
FIFO costing: sell 120 units
First receipt · Batch A
100 × 10,000 LAKUse all 100 units
Second receipt · Batch B
100 × 12,000 LAKUse 20; keep 80 units
Cost of goods sold: 1,240,000 LAK
100 × 10,000 + 20 × 12,000
Remaining stock value: 80 × 12,000 = 960,000 LAKWeighted-average comparison: if both receipts are available before the sale, average cost is 11,000 LAK. Selling 120 units costs 1,320,000 LAK; the remaining 80 units are worth 880,000 LAK. Both calculations allocate the same total purchase cost of 2,200,000 LAK differently.
FEFO: a later delivery can expire first
Batch A · received 1 September
Expires 31 DecemberFIFO would pick A first
Batch B · received 10 September
Expires 31 OctoberFEFO: pick B first →
Common mistakes and practical solutions
Negative stock
Issuing before recording receipts leaves no reliable cost layer. Record and approve receipts first; investigate stock differences before posting issues.
Wrong dates or missing expiry
Receipt order cannot substitute for expiry order. Capture batch, receipt and expiry dates; verify shelf life before picking.
Incorrect opening costs
A correct quantity with the wrong value distorts profit. Reconcile opening quantities and values to accounting; retain the agreed opening cost layers.
Returns at today's purchase cost
Link a return to the original issue and review its original cost and condition. Agree how returned goods re-enter available stock before posting.
Transfers lose cost history
An internal warehouse transfer should not create a new purchase price. Preserve traceability and the appropriate cost history across dispatch, transit and receipt.
Uncontrolled backdating
A late receipt can change earlier issue costs. Require approval, recalculate affected costs where appropriate, reconcile the ledger and protect closed periods.
Bring a real inventory case to your demo
Bring two purchase receipts at different costs, one issue, one return and one transfer. For dated products, include two batches with different expiry dates. Check quantities, picking order, cost of sales and remaining value with your team.
This is an educational guide. Confirm available FIFO/FEFO functions, costing methods and exception handling for your MaluOne implementation during the demo.
Discuss your inventory process