Stockout
In one sentenceAn item's balance running out before a new order arrives, so the customer asks for the item and does not find it, causing a lost sale and perhaps a lost customer.
Simply put
The cost of a stockout does not appear in the books, but it is real: lost profit and a customer who may go to a competitor and not come back.
You reduce it with a correct reorder point, suitable safety stock and close monitoring of the best-selling items.
Worked example
An auto parts store ran out of an item for a week, 40 customers asked for it and did not find it, and the profit margin per part is 25 SAR.
Lost orders40 parts
Margin per part25 SAR
Lost profit at least40 × 25 = 1,000 SAR
Don't confuse it with
Slow-moving inventoryA stockout is a shortage problem, while slow-moving inventory is an excess problem, and both are caused by weak planning.
in FullScreen ERP
The system shows the available substitute item when an item runs out. Warehouses and items