How the System Determines Lost Sales for Slow-Moving Items

Slow-moving items with low demand have longer forecast periods. For items that sell only a few times a year, you want to keep only the average sale quantity in stock and replenish them when needed. You replenish these items when you are ready to purchase them as part of a line buy. The percent that you set determines the number of days by which the system recommends to increase demand.

If you count all the days that a slow-moving item is out of stock as lost sale days and increase the item's raw demand, the item demand increases beyond its average sale quantity. This adjustment results in an unnecessary stock surplus. To prevent this, set the Lost Sale parameter to a lower percentage.

The system eliminates exceptional sales from the demand calculation before including lost sales in the demand forecast.

Example

The system uses the lesser of one of the following values to increase the item's raw demand:

The number of days that the item was out of stock during the forecast period.
The Lost Sale percentage multiplied by the number of days in the forecast period.

Compare the effect of two different Lost Sale percentages for slow-moving items:

Days out of stock	Forecast period	Lost Sale percentage	Forecast period * Lost Sale %	Increase item demand by...
100 days	365 days	80	292 days	100 days
100 days	365 days	20	73 days	100 days

By setting the Lost Sale percentage to a lower value for slow-moving items, the system increases demand by a percentage of the forecast period, thereby avoiding a stock surplus.