What is LIFO withdrawal method in SAP MM - Materials Management?

SAP Term: LIFO withdrawal method

• Component: MM

• Component Name: Materials Management

• Description: A method of issuing or withdrawing goods from stock whereby the most recent goods to be acquired are used or sold first last in, first out, or LIFO. The closing stock determined by the physical inventory thus always comprises the opening stock and the earliest acquisitions and is to be valuated with the prices thereof.

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• Key Concepts: 
  The Last In First Out (LIFO) withdrawal method is a type of inventory management system used in SAP Materials Management (MM). It is based on the principle that the last items to be added to inventory are the first ones to be removed. This method is used when the cost of goods sold is based on the most recent purchase prices. 
  
  How to use it: 
  In SAP MM, the LIFO withdrawal method is used when goods are issued from inventory. The system will automatically select the oldest stock items first, and then move on to the next oldest items until all of the required quantity has been issued. This ensures that the most recent purchase prices are used for cost of goods sold calculations. 
  
  Tips & Tricks: 
  When using the LIFO withdrawal method, it is important to ensure that all stock items are properly labeled and tracked so that they can be easily identified and selected by the system. Additionally, it is important to keep accurate records of all inventory transactions so that cost of goods sold calculations can be accurately determined. 
  
  Related Information: 
  The LIFO withdrawal method is one of several inventory management systems available in SAP MM. Other methods include FIFO (First In First Out), Average Price, and Standard Price. Each method has its own advantages and disadvantages, so it is important to choose the one that best suits your business needs.