Question 1

What is the true cost of stockouts?

Accepted Answer

The true cost of stockouts includes not only missed sales but also the impact on cash flow and revenue forecasting. Calculating this involves multiplying the daily sales average by the number of days out of stock and considering ranking recovery time.

Question 2

How can sellers avoid stockouts?

Accepted Answer

Sellers can avoid stockouts by implementing effective inventory management strategies, such as accurate demand forecasting, maintaining safety stock levels, and using technology to track inventory in real-time. These steps help ensure products are available when customers want to buy.

Question 3

Why are stockouts a cash flow problem?

Accepted Answer

Stockouts impact cash flow because they prevent sales, leading to a direct loss of revenue. Additionally, recovering from stockouts often requires extra marketing spend to regain ranking and visibility, further straining cash flow. Recognizing this helps sellers prioritize inventory management.