We are using FIFO for items which results in different tiers existing for PO receipts and this is working as expected.
And actually we have been using FIFO for quite a few years.
Sales Orders are created and later invoiced. Due to the nature of our business (oilfield product related) it is common to create an invoice and later a credit memo for that invoice as product is returned.
What we have noticed is that when the CM is done an OVER DISTRIBUTION tier is created for the returned qty and the tier cost is the last cost associated with the item.  This cost can be affected by subsequent PO receipts and the item costs may have changed. Furthermore if a later CM is processed, the same OD tier is updated with the qty but this time it is not the latest cost, but the average cost calculated from the transactions in between.  In either case this seems very wrong to us.  When the item is invoiced the item cost at that time (whether it be the single cost from one tier or the average cost from multiple tiers needed to fulfill the qty) is recorded in the invoice record.  Seemingly the CM should be using this cost recorded on the invoice record when returning the qty to inventory. This would be much more correct.

Example:
Item Cost: $13.47 - Invoiced
PO Receipt....new cost $17.25
CM...OD tier created with qty returned and cost of $17.25...this is WRONG. (should be $13.47).
...and it gets 'worse' when multiple CMs are done and the OD tier now contains an 'averaged cost'.

This is throwing the Inventory Valuation way off.

I have looked for an option to control this (use item cost recorded on invoice record instead of item cost), but it does not seem to exist.

Any thoughts?

Lonnie