[8] states that difference in production and purchasing opportunity provides firms with different comparative
advantages in adopting LIFO or FIFO. One of the key issues involved is how to use the production and purchasing
policy to keep the end inventory level constant. Because each year, as the inventory purchased or produced,
the new inventory will be added to the base inventory. It looks like a new layer of the inventory is added
on the top. Therefore, the researchers treat the total inventory as integrity with many layers.