What does FIFO stand for in inventory management?

FIFO stands for "First In, First Out," which is a method used in inventory management to determine the order in which products are sold or used. This approach operates on the principle that the oldest inventory items are sold or recorded as used first, ensuring that food products with limited shelf lives are utilized before they spoil.

This method helps maintain the quality of perishable goods, reduces waste, and allows for more accurate tracking of inventory costs, as it aligns with the actual flow of goods in many hospitality and food service operations. By adhering to the FIFO principle, businesses can improve their efficiency and better manage their stock levels, especially in environments where freshness is a critical factor.

Other options don't accurately reflect this inventory method, as they either describe different concepts or introduce phrases that are not commonly recognized in inventory management. Therefore, understanding FIFO is essential for effective inventory practices in the hospitality industry.