Understanding Allocation Rules in Warehouses

Warehouse allocation rules, FIFO, LIFO, FEFO

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What are Allocation Rules?

Allocation rules are a set of predefined guidelines and strategies that dictate how products are allocated or assigned to specific locations within a warehouse. These rules are designed to optimize storage space, improve order fulfillment, and enhance overall warehouse efficiency. They take into account various factors, such as product characteristics, demand patterns, and storage capacities.

Why Are Allocation Rules Important?

Efficient allocation of products is crucial for several reasons:

Optimal Space Utilization

Allocation rules ensure that storage space is used to its maximum capacity, reducing wasted space and storage costs.

Faster Order Fulfillment

By placing products strategically, warehouses can fulfill customer orders more quickly, leading to higher customer satisfaction.

Inventory Accuracy

Allocation rules help maintain accurate inventory records, reducing the chances of stockouts or overstock situations.

Minimized Handling

Proper allocation minimizes the need for frequent product movements within the warehouse, reducing labor and equipment costs.

Types of Allocation Rules

Allocation rules can be categorized into several types, each suited for specific warehouse scenarios:

1. FIFO (First-In, First-Out)

FIFO allocation ensures that the oldest products are the first to be picked and shipped. This is commonly used for perishable goods to prevent spoilage.

2. LIFO (Last-In, First-Out)

LIFO allocates the most recently received products first. This can be advantageous for non-perishable goods when new stock needs to be moved quickly.

3. ABC Analysis

ABC analysis classifies products into three categories based on their importance and usage. A-items are high-priority products, B-items are moderately important, and C-items are low-priority. Allocation rules are then applied accordingly.

4. Zone Picking

In larger warehouses, products are divided into zones, and allocation rules specify which zone should fulfill specific orders. This minimizes travel time for pickers.

5. Wave Picking

Wave picking groups multiple orders together and assigns them to pickers simultaneously, improving picking efficiency.

6. Slotting Rules

Slotting rules determine the best location for each product based on its size, weight, and demand. This ensures that frequently picked items are easily accessible.

Implementing Allocation Rules

To implement allocation rules effectively, warehouses can use Warehouse Management Systems (WMS) and advanced software solutions. These systems can analyze data, track inventory movements, and automatically apply allocation rules to optimize operations.


Allocation rules in warehouses are the backbone of efficient inventory management and order fulfillment. They ensure that products are stored and picked in a way that minimizes costs, maximizes space utilization, and improves customer satisfaction. By understanding and implementing the right allocation rules for your warehouse, you can streamline operations and stay ahead in the competitive world of logistics.

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