LIFO Inventory Method
For a LIFO Inventory, each packet of material is removed in the opposite order from when it came into the inventory. There is no mixing of material between the separate packets.
When a packet is flushed out, Sigmafine creates an event. Before the event, the composition of the material flow is the same as the original packet. After the event, the composition is the same as the new packet.
An inventory initially has 2000 bbl 50%A:50%B. There are three time slices during the accounting period. During time slice 1 a quantity of 2000 bbl 40%B:60%C enters and 1980 bbl are extracted. During time slice 2 a quantity of 1000 bbl is extracted and 3000 bbl 33.3%B:66.7%C enters. During time slice 3 1000 bbl are extracted and 500 bbl 100%A are added. The packet number signifies the order the packets entered into the inventory.
The calculation procedure is described below.
- Assume last in / first out for outputs.
- Add transactions entering the inventory in new columns on the right with a new packet number.
- Total the quantities in the last packet.
- Take the quantity of the last packet from the quantity leaving the inventory.
- If the result is positive then delete the last packet.
- Sum the new quantities for the last packet and subtract from the result to give a new result.
- If this result is positive follow the steps above.
- If the result is negative then prorate the result across all entries in the last packet and save over the original values.
The results are illustrated in the tables below.
Inventory has an opening volume of 2000 bbl and a starting composition of 50%A;50%B.
The Col 1, Col 2, …column syntax is Packet number.; material; quantity (bbl).
Initial Inventory Reading
| Inventory | Col 1 | Col 2 |
|---|---|---|
| 101 | 1;A;1000 | 1;B;1000 |
Time Slice 1 After influx of 2000 bbl Input of 40%B:60%C
| Inventory | Col 1 | Col 2 | Col 3 | Col 4 |
|---|---|---|---|---|
| 101 | 1;A;1000 | 1;B;1000 | 2;B;800 | 2;C;1200 |
Time Slice 1 After extraction of 1980 bbl
| Inventory | Col 1 | Col 2 | Col 3 | Col 4 |
|---|---|---|---|---|
| 101 | 1;A;1000 | 1;B;1000 | 2;B;8 | 2;C;12 |
Time Slice 2 After influx of 3000 bbl Input of 33.3%B:66.7%C
| Inventory | Col 1 | Col 2 | Col 3 | Col 4 | Col 5 | Col 6 |
|---|---|---|---|---|---|---|
| 101 | 1;A;1000 | 1;B;1000 | 2;B;8 | 2;C;12 | 3;B;1000 | 3;C;2000 |
Time Slice 2 After extraction of 1000 bbl
| Inventory | Col 1 | Col 2 | Col 3 | Col 4 | Col 5 | Col 6 |
|---|---|---|---|---|---|---|
| 101 | 1;A;1000 | 1;B;1000 | 2;B;8 | 2;C;12 | 3;B;667 | 3;C;1333 |
Time Slice 3 Add the input of 500 bbl A
| Inventory | Col 1 | Col 2 | Col 3 | Col 4 | Col 5 | Col 6 | Col 7 |
|---|---|---|---|---|---|---|---|
| 101 | 1;A;1000 | 1;B;1000 | 2;B;8 | 2;C;12 | 3;B;667 | 3;C;1333 | 4;A;500 |
Time Slice 3 Remove the material (same volume as Input starting with packet 1) – Ending Result
| Inventory | Col 1 | Col 2 | Col 3 | Col 4 | Col 5 | Col 6 | Col 7 |
|---|---|---|---|---|---|---|---|
| 101 | 1;A;1000 | 1;B;1000 | 2;B;8 | 2;C;12 | 3;B;500 | 3;C;1000 |
Inventory has an ending volume of 3520 bbl and a composition of 28.4%A:42.8%B:28.8%C.