AF-U6A- Inventory methods

AF-U6A- Inventory Methods Student Name Affiliation Course Instructor Date Introduction Businesses use an inventory to track all goods for sale, work-in-progress, and raw materials. The three main inventory methods are First-in, First-Out (FIFO), Last-In, First-Out (LIFO), and Average Cost. The FIFO method parallels the merchandise flow because it values the cost of goods sold using the earliest purchased materials. The ending inventory using this method is based on the valuation of the most recent units bought. Secondly, the LIFO method values the cost of goods sold based on the prices of the latest goods purchased. The ending inventory in this method is calculated using the prices of the oldest products purchased. In the Average Cost method, the cost of goods available for sale depends on the weighted average unit cost calculated by the firm. It does not use the mean price of the purchased goods but the mean weighted by the amount of commodities purchased per unit. The turnover of an inventory represents revenue generation and subsequent earnings for all shareholders affiliated with the business. This essay will analyze the inventory products best suited for this task and Walmart Inc.'s inventory control. Inventory Products Businesses choose the best inventory methods to use depending on the products they are handling, the managerial policy of the business, and its impact on making decisions. FIFO is best suited for products with a limited shelf life because it reduces their risk of spoilage or obsolescence. Perishable goods like fresh produce, dairy products, and seasonal goods fit this inventory method. LIFO is used for products th...