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Definition: FIFO (First In First OUT)
FIFO (First In First Out) is a term used to describe the flow of inventory in the order processing system. In this method of inventory flow system, the inventories are moved out of the system in the order of their arrival. The item which is moved in first will be moved first out of the system. It is derived from the concept of first come first serve basis.
This system is more used where the inventories gets more valued as they get old and system try to push the new inventory first in order to keep the old inventory to generate more value.
A fine example can be wine and Champagne which are more valued as they get older so the stockist tries to keep the oldest inventory and moves the new entry first.