Compare the operating models
In this fictional example, Lot A arrived 1 October and expires 30 December. Lot B arrived 8 October and expires 20 November. Both are otherwise eligible and have five units. The shop’s supplied policy wants earlier-expiring eligible juice issued first. This is physical picking, not an accounting valuation method.
| Business requirement | FIFO: receipt order | FEFO: expiry order |
|---|---|---|
| First candidate | A arrived first | B expires first |
| Pick three units | A three; B untouched | B three; A untouched |
| Required evidence | Receipt sequence | Actual lot dates and eligibility |
Work through the chosen model
Keep eligible lot quantities, receipt dates and expiry dates. First remove lots that do not meet the supplied customer requirements; then apply the chosen ordering. A sorting strategy cannot make an unsuitable or unknown-date lot suitable.
- Check the customer’s supplied requirements
- Find eligible lots
- Sort by the selected physical policy
FEFO needs reliable date capture and practical lot separation. FIFO requires receipt order but can miss expiry reversals. Neither strategy selects an order quantity or guarantees compliance with product-specific rules.
Choose FEFO here: issue three from B, leaving B two and A five. FIFO would leave the nearer-expiring B untouched, so it does not serve this supplied objective.
When the other model fits
The item has no expiry distinction and the shop wants oldest received units issued first. What changes?
Show the worked answer
FIFO fits the supplied objective. Do not invent expiry dates merely to use FEFO.