What is the difference between FIFO and FEFO?

FIFO ships stock in the order it arrived; FEFO ships it in the order it expires. They agree until a later delivery has an earlier expiry date — then FEFO ships the newer lot first.

For medicines in many places, yes: the EU's distribution guidelines, Saudi Arabia's SFDA and Abu Dhabi's Department of Health all require it. US drug rules require the oldest approved stock to go first.

Does FIFO in accounting mean FIFO in the warehouse?

No. Accounting FIFO is an assumption about which costs flow to cost of sales; it says nothing about which carton leaves the shelf. A business can rotate stock by FEFO and still account by FIFO.

Term

FIFO and FEFO

FIFO (first in, first out) ships the oldest stock first; FEFO (first expired, first out) ships the stock that expires soonest first. For medicines the rules are written down: the EU's distribution guidelines require FEFO, and US rules require the oldest approved stock of a drug to be distributed first. FIFO is also an accounting cost method — a different thing.

Also called FIFO, FEFO, first in first out, first expired first out, stock rotationUpdated 13 October 2026

Who requires which

Where	Rule	Source
US	Oldest approved stock distributed first; temporary, appropriate deviations allowed	FDA, 21 CFR 211.150
EU and UK	Rotate stock by first expiry, first out; document exceptions	EU GDP guidelines, 2013
Worldwide	Earliest expiry distributed or used before a later one	WHO, TRS 1025 Annex 7, 2020
Saudi Arabia	Stock closest to expiry first (FEFO), with exceptions	SFDA good storage and distribution practice
Abu Dhabi	FEFO, so older stock is used before newer	Department of Health standard, in force April 2026

Worked example: when FIFO and FEFO disagree

Lot 1 arrived January, expires December 2027 · Lot 2 arrived March, expires June 2027 → FIFO ships Lot 1 first; FEFO ships Lot 2 first

Illustrative lots. Under FIFO, Lot 2 would sit behind Lot 1 and risk expiring on the shelf; FEFO is the rule wherever shelf life matters more than arrival date.

FIFO the accounting method

In accounts, FIFO is a cost-flow assumption, not a picking rule: the IRS describes it as assuming the items purchased or produced first are the first sold. IFRS, through IAS 2, allows first-in, first-out or weighted average cost; US GAAP also permits LIFO, which IFRS does not. Buy 100 units at $10 and 100 at $12, sell 100: cost of sales is $1,000 under FIFO, $1,100 at weighted average and $1,200 under LIFO — whichever units physically left the building.

The mistake people make

Assuming the system's FIFO setting means expiry is managed. A warehouse system set to FIFO ships by receipt date, and a later delivery with a shorter shelf life will expire behind older stock. For anything with a use-by or expiry date, pick by expiry and record exceptions, as the EU guidelines require.

FAQ

FIFO and FEFO: common questions

What is the difference between FIFO and FEFO?: FIFO ships stock in the order it arrived; FEFO ships it in the order it expires. They agree until a later delivery has an earlier expiry date — then FEFO ships the newer lot first.
Is FEFO mandatory?: For medicines in many places, yes: the EU's distribution guidelines, Saudi Arabia's SFDA and Abu Dhabi's Department of Health all require it. US drug rules require the oldest approved stock to go first.
Does FIFO in accounting mean FIFO in the warehouse?: No. Accounting FIFO is an assumption about which costs flow to cost of sales; it says nothing about which carton leaves the shelf. A business can rotate stock by FEFO and still account by FIFO.