OutofStockRate

OutofStockRate is a metric used in retail and supply chain management to quantify how often items are not available when customers try to purchase them. It reflects the frequency and impact of stockouts across products or time.

There are two common definitions: stockout rate by occurrence (the proportion of stockkeeping units or replenishment cycles that experience at least one stockout within a period) and unmet demand rate (the share of customer demand that cannot be fulfilled due to stockouts).

Calculation requires data from inventory systems: stock levels, sales, replenishment, and backorders. For time-based measurement, OutofStockRate_time = total stockout duration / total observation time. For demand-based measurement, OutofStockRate_demand = unmet demand / total demand.

Interpretation: lower is better; the metric helps evaluate service levels, forecast accuracy, and safety stock. It informs replenishment policies and supplier performance, and it can be used to monitor changes over time or across product categories.

Limitations include dependence on data quality and granularity, potential variation by product, and the possibility of misrepresenting conditions due to backorders, substitutions, or promotional spikes. Seasonal effects and differences in ordering practices can also affect the measure.

Related metrics include fill rate, service level, stockout frequency, stockout duration, and inventory turnover. Strategies to reduce OutofStockRate include optimizing safety stock, improving forecast accuracy, shortening supplier lead times, and implementing real-time inventory tracking and more responsive replenishment processes.