An assessment of FIFO and LIFO policies for perishable inventory systems using the system dynamics ppproach

College

Gokongwei College of Engineering

Department/Unit

Industrial Engineering

Document Type

Conference Proceeding

Source Title

2019 IEEE 6th International Conference on Industrial Engineering and Applications, ICIEA 2019

First Page

251

Last Page

255

Publication Date

5-14-2019

Abstract

This study applied the System Dynamics methodology in evaluating the equilibrium state performance of First-In-First-Out (FIFO) and Last-In-First-Out (LIFO) for perishables. It recognizes that while a certain policy may have optimal results for a few successive periods, it may produce undesirable patterns in the long-term (e.g. accumulation of old stock). A non-perishables scenario was simulated for each policy to validate the logic of the model, and for comparison. This revealed that while FIFO and LIFO have little difference in the long-term for non-perishables, there is a major difference for perishables. Based on the results, this study concludes that LIFO is superior in equilibrium, in terms of consistency in quality of goods sold and stability of production rate.

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Digitial Object Identifier (DOI)

10.1109/IEA.2019.8714839

Disciplines

Industrial Engineering

Keywords

First in, first out (Accounting); Last in, first out (Accounting); Perishable goods—Inventories

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