inventory circulation includes physical circulation and cost circulation. Due to the inconsistency between physical circulation and cost circulation in actual work, the assumption of inventory cost circulation appears. Using a certain assumption of inventory cost transfer, the cost is allocated between ending inventory and issuing inventory, which leads to different inventory cost allocation methods, that is, the pricing method of issuing inventory. Common inventory valuation methods include: individual valuation method, first-in first-out method, weighted average method, moving average method, last-in first-out method, planned cost method, gross margin method, retail price method and so on. Different inventory valuation methods will have different effects on the financial situation and profit and loss of enterprises.