FIFO refers to a "First In, First Out" system; this is a method for accounting for your price per unit, where the oldest (first) entry is accounted for first when the MSKU is sold.
The FIFO accounting method is known to be logical for businesses to follow since selling off the oldest goods first reduces the risk of inventory obsolescence.
If you enter accounting details for items as you list using our application, you're all set to have InventoryLab automate the FIFO method as your items sell.
Each time you replenish an MSKU by adding it to a batch, a new row will automatically be added on the Replenishment Page for your inventory item with the quantity, cost/unit, and purchased date information entered with the item when added to the batch. This is how InventoryLab tracks different costs/unit for the same MSKUs.
When viewing the Replenishment page for an item in your Inventory, the Initial or First Purchase row is displayed first, then the Replenishment rows are numbered in order by Purchase Date. This is also the FIFO order in which the different purchase details in the rows are accounted for on your sales.
For example, in the image above, the Initial Purchase row has a cost/unit entered as 6.99 for a qty of 3 units, so that cost will be applied to the first three units of this MSKU that sell. Then, once those units have sold, the system will move on to the Replenishment 1 row with the $5.99 cost/unit, which will be applied to the following three units that sell.
If you do not list through our application, you can use the steps linked below to add accounting details for your replenishments. This will ensure FIFO will be used as the item sells.