Which inventory method uses the oldest stock first to prevent obsolescence?

Which inventory method uses the oldest stock first to prevent obsolescence?

• A. FIFO uses oldest stock first to prevent obsolescence.
• B. LIFO uses oldest stock first to minimize taxes and holding costs.
• C. FEFO uses items with the shortest shelf life first.
• D. JIT focuses on ordering to match demand, reducing stock levels.

Answer: (A)

The main idea here is moving aging inventory out before it loses value. FIFO accomplishes this by using the oldest items first, so stock that has sat longest is sold or used before newer arrivals. This helps prevent obsolescence or spoilage for items that can become outdated over time. LIFO, on the other hand, uses the most recently received items first, which doesn’t specifically target aging stock and is chosen for different reasons such as certain tax or cost considerations. FEFO prioritizes items with the earliest expiration dates, which is about shelf life rather than age in storage. JIT aims to minimize inventory by aligning orders with demand, not by prioritizing older stock. So the approach that uses oldest stock first to prevent obsolescence is FIFO.

The main idea here is moving aging inventory out before it loses value. FIFO accomplishes this by using the oldest items first, so stock that has sat longest is sold or used before newer arrivals. This helps prevent obsolescence or spoilage for items that can become outdated over time. LIFO, on the other hand, uses the most recently received items first, which doesn’t specifically target aging stock and is chosen for different reasons such as certain tax or cost considerations. FEFO prioritizes items with the earliest expiration dates, which is about shelf life rather than age in storage. JIT aims to minimize inventory by aligning orders with demand, not by prioritizing older stock. So the approach that uses oldest stock first to prevent obsolescence is FIFO.