--- title: "What Is FEFO?" url: https://www.uncap.com/glossary/fefo author: "Denis Dyli" published: 2026-10-28 updated: 2026-10-28 summary: "FEFO (first expired, first out) is a stock rotation rule that picks, ships or uses the units with the earliest expiration date first, whatever order they arrived in. It applies to goods that carry an expiration date, and it works only when each lot or serial-numbered unit has that date recorded, so the system can sort stock by it." --- # What Is FEFO? > FEFO (first expired, first out) is a stock rotation rule that picks, ships or uses the units with the earliest expiration date first, whatever order they arrived in. It applies to goods that carry an expiration date, and it works only when each lot or serial-numbered unit has that date recorded, so the system can sort stock by it. **FEFO**: FEFO (first expired, first out) is a stock rotation rule that picks, ships or uses the units with the earliest expiration date first, whatever order they arrived in. It applies to goods that carry an expiration date, and it works only when each lot or serial-numbered unit has that date recorded, so the system can sort stock by it. ## How it works FEFO is a picking and rotation rule: when several lots of the same item are on hand, the lot that expires first goes out first. Microsoft's Business Central documentation describes First-Expired-First-Out (FEFO) as a sorting method that ensures that items with the earliest expiration dates are picked first. In Business Central, Microsoft's ERP, FEFO picking is a setting on top of serial, lot or package tracking: - First, the item needs an item tracking code with serial, lot or package warehouse tracking, and it must be posted to inventory with an expiration date. - The location needs the Pick According to FEFO toggle turned on. Warehouse picks also need Bin Mandatory turned on. - When the criteria are met, the serial or lot-numbered items to pick are sorted with the oldest first in all picks and movements. - Lots named on the source document, such as a sales order, are respected first. If two lots share an expiration date, Business Central picks the lowest lot or serial number. - With Strict Expiration Posting selected, only items that aren't expired are included in the pick. ## FEFO vs FIFO [FIFO](/glossary/fifo) ships the oldest stock first, by when it was received or made. FEFO ships the stock that expires first. When lots arrive in expiry order, both rules pick the same lot. They differ when a newer receipt expires sooner than an older one. For drug products, FDA's current good manufacturing practice rules use both kinds of date. 21 CFR 211.150 requires written distribution procedures that include a procedure whereby the oldest approved stock of a drug product is distributed first, and it permits a deviation if the deviation is temporary and appropriate. 21 CFR 211.137 requires a drug product, apart from the exemptions that section lists, to bear an expiration date determined by appropriate stability testing. This is general information, not regulatory advice. ## Example A distributor holds two lots of the same nutrition drink: - Lot A: received March 1, 40 cases, expires September 30. - Lot B: received March 15, 25 cases, expires August 31. An order for 30 cases arrives. - FIFO picks by receipt date: 30 cases from Lot A, leaving 10 of Lot A and all 25 of Lot B. - FEFO picks by expiration date: all 25 cases of Lot B, then 30 - 25 = 5 cases from Lot A, leaving 35 cases of Lot A, which expires a month later. ## On Shopify Shopify tracks inventory as quantities in states at each location. Available inventory refers to inventory that you can sell. Committed inventory refers to the number of units that are set aside and can't be sold, such as units in an unfulfilled order. Unavailable inventory refers to the number of units set aside by apps or held for other reasons. In Business Central, picking the lot that expires first is the Pick According to FEFO setting on the location, described above. ## How Uncap helps On Uncap's [food service distribution](/industry/food-service-distribution) page, lot and expiry are captured at fulfillment and written back against the order line, and expiry and date-code acceptance rules are applied at ordering so an account with a minimum remaining shelf life requirement is not sold product that will be refused on arrival. Uncap's guide to [food distributor software](/post/food-distributor-software-what-to-evaluate-before-you-build-an-online-channel) lists FEFO visibility: when a buyer orders a product, they should know what expiry window they are receiving. ## Related terms - Lot number - LIFO - Warehouse management system (WMS) - Dead stock - Cycle counting ## Sources - Microsoft Learn: How to enable picking by FEFO (Business Central) - 21 CFR 211.150: Distribution procedures (LII) - 21 CFR 211.137: Expiration dating (LII) ## Frequently asked questions ### What is the meaning of FEFO? FEFO stands for first expired, first out. It is a stock rotation rule that picks, ships or uses the units with the earliest expiration date first, whatever order they arrived in, so it needs an expiration date recorded for each lot or serial-numbered unit. ### What is FEFO vs FIFO? FIFO (first in, first out) ships the oldest stock first, by when it was received or made. FEFO (first expired, first out) ships the stock with the earliest expiration date first. The two pick different lots when a newer receipt expires sooner than an older one. ### What is FEFO used for? FEFO is used to rotate goods that carry an expiration date, so the units that expire soonest are picked first. In Business Central, Microsoft's ERP, it is a location setting that sorts lot or serial-numbered items by expiration date in picks and movements. ### What is LIFO and FEFO? LIFO (last in, first out) is an inventory costing method that assumes the newest goods are sold first, and it decides which costs go to cost of goods sold. FEFO (first expired, first out) is a physical picking rule that sends out the units with the earliest expiration date first.