LIFO or FIFO: Which is the better inventory management method?

Your choice is primarily dependent on the type of goods that you are managing. FIFO (first in, first out) inventory management is ideally suited to perishable and time dependent goods such as foodstuffs and technology that may become obsolete. LIFO (last in , first out) is more suitable for products that are unlikely to become obsolete, such as jewellery and household furniture.

FIFO is the most popular choice because this represents the actual flow of product in and out of your inventory management system. LIFO inventory management can be more complicated as it assumes that older items may remain in stock longer.