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Retail & Allocation lesson

Stock-outs hide demand

Sales before and after, and how often it was in stock.

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The idea

Sales before and after, and how often it was in stock:

Formulas

Sales ÷ In-stock %
Demand − Sales

Key points

Sales aren't demandA store can't sell what it hasn't got. When it runs out, sales fall even if customers still want it.
Estimate demandMontreal: 24 ÷ 0.4 = 60 a week.
Lost salesMontreal: 60 − 24 = 36 a week it could have sold.
Check before you cutLook at in-stock % before cutting any store's allocation.

Sales only show demand when the shelf was full. A store that ran out needs more stock, not less.

Practice

Try each one in your head first, then open the answer.

1. Two stores' sales fell. Tap the one whose sales fell because it ran out of stock.
Montreal was in stock only 40% of the time.
2. Montreal sold 24 a week while it was in stock 40% of the time. About how many a week would it sell with full stock?
24 ÷ 0.4 = 60 units a week
3. In D3, work out Montreal's lost sales a week, in units.
=B3/C3-B3
4. Halifax's and Montreal's sales both fell. The buyer wants to cut both stores' next delivery. What do you say?
Cut Halifax, but send Montreal more: its customers didn't stop buying, its stock ran out

Learn it by doing. This lesson is a short hands-on level on Bampaa: see it work, then build and write it yourself, with instant feedback.

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About 5–10 minutes · no sign-up needed