Accounting method used for inventory value

Zenventory uses a “specific identification” method for calculation of inventory value in our reports. Each unit of inventory received is assigned a particular value upon receipt, and that value sticks with the unit of inventory until sold/deducted. In many cases, if an item is stored in only one particular location and doesn’t have any other specific identifiers such as an expiration date, the method that inventory is allocated for fulfillment or deduction will typically default to FIFO. However, there are instances where FIFO may not be enforced due to the item type and how it is stored:

  • Perishable items will be allocated as FEFO (first expiring, first out)
  • Lot-tracked product will be allocated based on the lot number (A-Z, ascending)
  • Items stored in multiple locations in the warehouse will be allocated based on location name (A-Z ascending) and/or stock quantity (a “pick to clean” method for ensuring that low stock positions are cleared first to make room)

There is also a possibility that a user within the system can choose to manually allocate stock for an order or for deduction. In this situation, they can choose any particular stock without regard for any of the rules above.

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