MRP glossary TOP > Inventory Control > Last-in First-out
Last-in First-out
Last-in First-out
It is a method for inventory valuation or delivery cost calculation, meaning that the most recently received items are the first to be taken out of a warehouse. This scheme is just like a relationship between a taxi and its customers, where a taxi can be compared to a warehouse while a couple of customers can be compared to goods in stock (inventory). In this case, the customers (inventory) leave the taxi (warehouse) in the reverse order of boarding (meaning that the last boarding customer first leaves the taxi). Thus first-in goods don't have to be very often moved and therefore a stable cost level can be maintained.
Related term: Cost Approach
It is a method for inventory valuation or delivery cost calculation, meaning that the most recently received items are the first to be taken out of a warehouse. This scheme is just like a relationship between a taxi and its customers, where a taxi can be compared to a warehouse while a couple of customers can be compared to goods in stock (inventory). In this case, the customers (inventory) leave the taxi (warehouse) in the reverse order of boarding (meaning that the last boarding customer first leaves the taxi). Thus first-in goods don't have to be very often moved and therefore a stable cost level can be maintained.
Related term: Cost Approach
Reference：JIT Business Research Mr. Hirano Hiroyuki