What is LIFO in SAP MM - Materials Management?

SAP Term: LIFO

• Component: MM

• Component Name: Materials Management

• Description: An approach used in the LIFO withdrawal method and the LIFO valuation procedure. LIFO stands for "last in, first out".

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• Key Concepts: 
  LIFO stands for Last In First Out and is a method of inventory management used in Materials Management (MM) in SAP. It is a type of inventory valuation method that assumes that the last items added to inventory are the first items sold. This method is used to calculate the cost of goods sold and the value of inventory on hand. 
  
  How to use it: 
  In SAP, LIFO is used to determine the cost of goods sold and the value of inventory on hand. When goods are received, they are added to the inventory with their associated costs. When goods are sold, the cost associated with the last items received is used to calculate the cost of goods sold. The remaining inventory is then valued at the cost of the last items received. 
  
  Tips & Tricks: 
  When using LIFO in SAP, it is important to ensure that all costs associated with goods received are accurately recorded. This will ensure that the correct cost of goods sold and inventory value are calculated. Additionally, it is important to keep track of all inventory movements so that any discrepancies can be identified and corrected quickly. 
  
  Related Information: 
  LIFO is one of several methods used for inventory valuation in SAP Materials Management (MM). Other methods include FIFO (First In First Out), Average Cost, and Standard Cost. Each method has its own advantages and disadvantages, so it is important to understand which method best suits your business needs before implementing it in SAP MM.