What happens when you can't follow FIFO or LIFO method in your Distribution Management ?

Using FIFO, the cost of goods sold is valued based on the cost of the oldest items in inventory. LIFO values cost of goods sold based on the cost of the newer inventory. Both methods have advantages and disadvantages specially when calculating the net income. If you don't follow FIFO or LIFO methods, then another inventory valuation method has to be applied: Weighted average method, Moving average method are other valuation methods that can be used.

There's no doubt that you have to follow a system with a clearly defined rule, processes and procedures, specially in distribution management . No planning is planning to fail !

Anyway LIFO can be used when you need an accurate COGS estimation and calculation, especially if there's old cheap stock. but FIFO must be used for perishable items.