Last In, First Out (LIFO) is an inventory management system used in procurement that dictates that the items that are received last must be dispensed or sold first. This method helps ensure that businesses always maintain a steady supply of fresh and current stock, while also preventing the obsolescence of goods. LIFO allows organizations to maximize their inventory utilization by leveraging the principles of supply and demand, ensuring they are always stocked with up-to-date merchandise needed to meet customer demands.