Which of the following best describes stock rotation?

Stock rotation is a crucial practice in inventory management that ensures older stock is sold or used before newer inventory. This method helps minimize losses due to obsolescence or spoilage, especially for perishable or time-sensitive items. The concept of first-in, first-out (FIFO) is a widely adopted approach to stock rotation. In FIFO, the oldest inventory items are prioritized for sale or use before newer items are brought into the sales or operational cycle. This way, organizations can maintain product quality and reduce waste, thus maximizing profitability and efficiency.

Utilizing FIFO aligns with the principles of stock rotation by ensuring that goods move through the supply chain in the order they were received, which ultimately helps in managing inventory more effectively and mitigating risks associated with expired or outdated products. Hence, this understanding solidifies why the correct answer focuses on using FIFO as a foundational element in stock rotation practices.