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)

This question is about how rotating stock can prevent obsolescence. The approach that uses the oldest stock first is First-In, First-Out. By issuing or selling items in the order they came in, older inventory is cleared out before newer arrivals, which reduces the chance that items sit long enough to become obsolete or expire. This is especially important for items with a limited shelf life or rapid changes in technology or style. The other methods don’t target oldest stock specifically. Using the newest items first can affect costs and valuation but doesn’t address obsolescence risk. Prioritizing the shortest shelf life first is great for perishables, but it focuses on expiration dates rather than simply aging stock. Just-in-time aims to minimize on-hand inventory by aligning purchases with demand, not directly preventing obsolescence.

This question is about how rotating stock can prevent obsolescence. The approach that uses the oldest stock first is First-In, First-Out. By issuing or selling items in the order they came in, older inventory is cleared out before newer arrivals, which reduces the chance that items sit long enough to become obsolete or expire. This is especially important for items with a limited shelf life or rapid changes in technology or style.

The other methods don’t target oldest stock specifically. Using the newest items first can affect costs and valuation but doesn’t address obsolescence risk. Prioritizing the shortest shelf life first is great for perishables, but it focuses on expiration dates rather than simply aging stock. Just-in-time aims to minimize on-hand inventory by aligning purchases with demand, not directly preventing obsolescence.