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Raktim Ranjit
Raktim Ranjit

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Restaurant Inventory Costing: Weighted Average for Recipes, FIFO for Waste

Inventory costing is not only a report calculation. The method you choose changes what a restaurant sees when it reviews recipe cost and waste.

OrderRestro uses weighted-average costing for ingredients when goods are received. That gives a blended unit cost for a recipe rather than making every dish inherit the price of whichever delivery happened to arrive last. For waste, the system draws from the oldest stock batch first, so the cost can reflect the batch that actually spoiled.

Those two rules answer different operational questions. Recipe costing asks, “What is a reasonable current cost for this ingredient?” Waste logging asks, “Which stock was consumed when this loss occurred?” Treating both as one method can make one of those views less useful.

There is also a deliberate checkout trade-off: ingredient deduction does not block a paid sale when modeled stock runs short. A missing or imperfect recipe should not stop a customer from paying for food already served. Waste logging is different; it has no such urgency and does not consume beyond available stock.

These are product and accounting choices, not universal advice. A restaurant should verify that its chosen method fits its reporting and regulatory requirements. In code, document the decision, test two receipts with different costs, then test a waste event and a sale against the resulting balances.

The inventory implementation is in the OrderRestro source. I share more about the product work at RaktimRanjit.com.

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