What is the FIFO Cost Lot Tracking?

FIFO cost lot tracking, tracks your inventory based on ‘First In First Out’ system that will enable you to assess the value of your inventory. This essentially means that the oldest inventory items are recorded as sold first irrespective of whether its actually done this way or not.

In Zoho Inventory, the stock that comes in first to the organization through any means like the opening stock, and other purchase transactions gets sold out in the same order. In simple words, the stock which comes in first, goes out first.

Let’s understand this better with the help of a scenario. John has an opening stock of 100 laptops, which he enters in Zoho Inventory. He purchases another 50 of them from Bailey, and records a bill for it. Now, John decides to sell 2 laptops to his customer.

In this case, John will have two lots of laptops – the opening stock (100 laptops) and the stock from the bill (50 laptops). When he sells the laptops, the stock gets deducted from the opening stock first since this is his first lot. After the opening stock of 100 laptops get sold out, the stock gets deducted from the next transaction recorded in Zoho Inventory (in this case, the bill from Bailey).

It doesn’t matter from where John manually selects the two laptops, i.e., the opening stock or the stock received from Bailey. It will always be deducted from the first lot (in this case, the opening balance).

Learn more about the FIFO Cost Lot Tracking report.