First-In-First-Out, or FIFO, is an inventory management method where the oldest stock is sold or used first. This approach helps businesses maintain fresh products and reduces waste, especially in industries like food and pharmaceuticals, where expiration dates are crucial. In a FIFO system, items are organized so that the first ones added to inventory are the first to be removed. This ensures that customers receive the oldest items first, promoting efficiency and minimizing the risk of holding onto outdated stock. Overall, FIFO is a straightforward strategy for managing inventory effectively.