{"id":8324,"date":"2020-04-13T07:32:08","date_gmt":"2020-04-13T11:32:08","guid":{"rendered":"https:\/\/demand-planning.com\/?p=8324"},"modified":"2020-04-13T07:32:08","modified_gmt":"2020-04-13T11:32:08","slug":"how-do-i-calculate-lost-sales-from-a-stockout","status":"publish","type":"post","link":"https:\/\/demand-planning.com\/2020\/04\/13\/how-do-i-calculate-lost-sales-from-a-stockout\/","title":{"rendered":"How Do I Calculate Lost Sales From A Stockout?"},"content":{"rendered":"

Q:<\/strong> Thanks for the Wonderful Book “Fundamentals of Demand Planning & Forecasting”. Is there any best proven and Industry accepted model\/algorithm to calculate sales loss? For example, the actual sale duration for an item is from 7 am to 10.30 pm every day. But if an item is sold out at 6 pm, how do we calculate the number of sales that we lost\/missed during the remaining time period from 6 pm to 10.30 pm?<\/p>\n

I am working as a Demand Planning Manager in the Food & Beverages and Health & Supplement industries. We do demand planning on a daily basis with 3 days in advance (T-3) for Sale day (T) {Freeze Demand plan on Monday for Thursday’s sales}. We need a minimum of 2 days (T-2 & T-1) for procurement, transport, cooking and other operations. Buffer stock\/Safety stock is not possible as shelf life of cooked food is max 24 hours. So on any day, our forecasted demand is equal to sum of sales plus wastage.<\/p>\n

Often we face difficulties in calculating the correct sales loss percentage due to item stock outs.<\/p>\n

Below is the data (imaginary numbers):<\/p>\n

Date Stockout @ Demand Sold Wastage Sales Loss
\nDay 1 No Stockout 100 95 5 –
\nDay 2 No Stockout 105 98 7 –
\nDay 3 No Stockout 105 100 5 –
\nDay 4 21:42:29 95 95 – ?
\nDay 5 21:34:40 100 100 – ?
\nDay 6 20:21:47 98 98 – ?
\nDay 7 20:09:54 100 100 – ?
\nDay 8 No Stockout 115 105 10 –<\/p>\n

Is there any algorithm\/method to calculate sales loss for the days 4 to 7 in order to identify the overall potential sales\/day?<\/p>\n

MAPE = {(Wastage+Sales Loss)\/Actual Sales}*100<\/p>\n

Without correct sales loss numbers, it is very difficult to get MAPE correct.<\/p>\n

Thanks in advance.<\/p>\n

 <\/p>\n

A:<\/strong> Your problem is very unique, and thus you won’t find any textbook that discusses it. If I were to face this problem, I would take the average sales on days when\u00a0there was no stockout. The difference between the average demand and actual sales is your loss. For example on day 4 sales would have been\u00a0106 but you sold only 95, so lost sales equals 11 units.<\/p>\n

\"\"<\/p>\n

 <\/p>\n

I hope this helps.<\/p>\n

Happy forecasting.<\/p>\n

 <\/p>\n

Dr. Chaman Jain<\/strong><\/p>\n

St. John’s University<\/strong><\/p>\n<\/span>","protected":false},"excerpt":{"rendered":"

Q: Thanks for the Wonderful Book “Fundamentals of Demand Planning & Forecasting”. Is there any best proven and Industry accepted model\/algorithm to calculate sales loss? For example, the actual sale duration for an item is from 7 am to 10.30 pm every day. But if an item is sold out at 6 pm, how do […]<\/p>\n","protected":false},"author":4,"featured_media":8329,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[386],"tags":[],"class_list":{"0":"post-8324","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-analytics"},"_links":{"self":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts\/8324"}],"collection":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/comments?post=8324"}],"version-history":[{"count":0,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/posts\/8324\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/media\/8329"}],"wp:attachment":[{"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/media?parent=8324"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/categories?post=8324"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demand-planning.com\/wp-json\/wp\/v2\/tags?post=8324"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}