Removal Strategy: FIFO in Odoo 18 Inventory | How FIFO Works in Odoo 18 Inventory | Odoo 18 Features
1FIFO (First In, First Out) is a common inventory valuation method where the oldest inventory items are sold first. In Odoo, you can configure this strategy for specific product categories to ensure accurate cost calculations and financial reporting.
How to Set Up FIFO Removal Strategy in Odoo:
Define Product Categories:
Create product categories to group similar products.
Assign a removal strategy to each category.
Set the Removal Strategy:
Go to Inventory -- Configuration -- Settings.
Under the Inventory tab, find the Removal Strategy field.
Select FIFO from the dropdown menu.
How FIFO Works in Odoo:
When you create a delivery order or invoice for a product with the FIFO removal strategy, Odoo:
Identifies the Oldest Inventory:
It determines the oldest inventory items for that product based on their purchase or manufacturing date.
Allocates Costs:
The cost of the oldest inventory items is assigned to the delivery or invoice.
This ensures that the cost of goods sold (COGS) reflects the actual cost of the oldest products.
Benefits of Using FIFO in Odoo:
Accurate Cost Calculations: By using the actual cost of the oldest inventory, you can ensure accurate COGS calculations.
Improved Financial Reporting: Accurate COGS calculations lead to more reliable financial statements.
Efficient Inventory Management: FIFO can help you identify slow-moving inventory and take appropriate actions.
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