Fifo First In, First Out

First In, First Out is a storage strategy in which the products stored first are the first to go into storage. camp leave again first.

the FIFO method (First In, First Out) is a common method of stock valuation. It assumes that the first items received into the warehouse are also the first to be removed. This method valuates goods issues based on the prices of the oldest goods receipts.

How the FIFO method works

If an item is purchased at different times and prices, the purchase price SAP Business One indicates that the first items sold are from the first delivery. As long as the quantity from the first purchasing document has not been used up, the system uses its price to calculate the sales value and gross profit. As soon as this level is exhausted, the price from the next delivery is used.

Example:

Goods receipt 15 units of EUR 100 each → FIFO level 1.
Goods receipt 25 units of EUR 200 each → FIFO level 2.
Sale of 3 unitsThe system uses the 3 units from FIFO level 1 (100 EUR per unit).
The remaining 2 units from level 1 remain before level 2 is used.

If the item prices increase over time, FIFO evaluates the remaining Stock levelse with the higher prices of the later purchasing documents.

FIFO level management

SAP Business One manages article costs via FIFO levels. Each stock receipt transaction creates a new level with a defined quantity and the associated costs. Stock issue transactions use quantities and costs from the oldest open level.

The system offers a FIFO level report according to consumption sequencewhich shows the open levels in order of consumption. This report:

Shows the maximum number of levels to be displayed.
Groups data by warehouse if the management of article costs per warehouse is activated.
Can be accessed via the context menu in the item master data retrievable.

Simulation of stock valuation

The FIFO method can also be used in the Stock valuation simulation can be used. The last valued price of an item is updated with the costs of the next open FIFO level. This enables a precise estimate of the stock value based on future Transactions.

Advantages of the FIFO method

Realistic valuationThe cost calculation is based on the actual procurement times.
Detailed tracking: By managing levels, stock levels can be precisely evaluated.
FlexibilityReports and simulations enable companies to make informed decisions about stock movements and cost management.

SAP Business One ensures that companies can carry out transparent and efficient inventory valuation using the FIFO method.

SAP B1 blog