Inventory costing method 2: first in first out (FIFO)

For the FIFO costing method, the Sterling Order Management System Software agents match receipts and shipments in first in, first out (FIFO) order and record the matched cost information.

This matched information is used for reporting and posting to financial systems. Agents also post inventory cost data to financial and inventory systems.

As returns are processed, decrements to inventory are rolled back in FIFO order, meaning that the last item that was shipped is the one assumed to be returned in order to determine the cost of the returned item.

Sterling Order Management System Software provides APIs to perform receipts of inventory, shipments, and returns. A user exit is called for adjustments, shipments, and returns in order to provide the logic for general ledger account number determination and cost determination, if needed. Inventory adjustments accumulate for manual review by a cost accountant before posting records to the matching tables. This allows cost accountants to adjust cost at the aggregate item level and cancel out adjustments.