To determine the impact, we first have to understand what a Stocked out item is. A stocked item that has an Available stock position that is currently zero or negative will be allocated a status of “Stocked out”. The Stocked out figure is defined as the value of sales that will be lost from now until sufficient stock arrives to raise the Available stock position above zero. To derive this number of stocked out units, we use the accumulated demand from the day of stock out until the first firm receipt or duration of the lead time, whichever is shorter. If you are using the table on the Projection tab to view the accumulated demand, it can be counted from the day the opening stock turns zero or negative.

This article aims to answer the following questions that you may have:

If you have an item with the status of “Stocked out”, you may have wondered what impact overdue purchase orders have on the units of lost sales reflected. Let’s explore this using an example.

Item 448381 at the Central Store below reflects a Stocked out status value of 57 units. This status can be found on the Inquiry screen of the item. The item has a lead time of 17 units which can be seen in the Policy panel on the image below. If we look at the Inventory position panel of the item, we can see that the current stock on hand of the item is 0 units and that there is Overdue demand of 40 units. This has caused the available stock of this item to be -40 units. On the same panel, we see that this item has one or more orders in place for a total of 400 units.

To investigate the orders further (“How much was ordered?” “When will it arrive?”), we use the Purchase orders tab. This particular item has only one order in place for 400 units, and the due date of the order is 27 August. The “today’s” date can be viewed on the top left corner of the dashboard. Since “today’s” date is 28 August - this purchase order is overdue by one day. The colors of the dots next to the due dates indicate whether the open purchase orders (POs) are overdue or not. Future due dates for open purchase orders are indicated with a green dot, while past due dates are indicated with a red dot, indicating that the order is late or overdue.

Since the purchase order has not yet been received, it will not change the figure reflected on the status panel. This is to ensure you are able to critically review this item and mitigate the stock out to reduce the impact on your customer satisfaction. Action is required to prevent further lost sales.

The Projection tab takes a different approach. Here, the graph and table will “assume” the overdue purchase order will be delivered on “today’s” date i.e. 28 August. The purpose of this view is to help one make inventory decisions based on the projected opening and closing stock figures each day for 12 months.

The information in the Projection tab will reflect as follows:

On 28 August, the opening stock is -40. There is a firm receipt (i.e. the overdue order) of 400 units. The calculation for closing stock is: Opening stock - demand (stock leaving the company) + receipts (stock entering the company). Therefore, the closing stock will equal to:

-40 (opening stock) - 3 (demand) + 400 (receipts) = 357

If you do not have overdue demand, the calculation for the status units remains the same. It will be your stock on hand of 0, less accumulated demand until the next purchase order arrives, or for a lead time worth of stock (the shorter of the two). See example below.

Item 445505 at the Central Store has no overdue demand with 0 available stock and a lead time in units of 3245.

Opening up the table on the Projection tab reveals that similar to the first example, other than the overdue purchase order, there are no other purchase orders due within the lead time. Likewise, the overdue purchase order does not change the status units because it has not actually been received. That way, the Stocked out item can still be identified for mitigation purposes. The status units will be calculated as available stock less lead time in units.

0 (available stock) - 3245 (lead time in units) = -3245 (stocked out units)

Item 445509 at the Central Store has overdue demand and overdue purchase orders. It also does not have any orders in the pipeline within the lead time, as shown on the Projection tab table. It has a lead time in units of 552 with an available stock level of -146 units.

The calculation here will again then be available stock less lead time in units.

-146 (available stock) - 552 (lead time in units) = -698 (stocked out units)

Item BQ1246FGN07 at the ABC Warehouse has overdue demand, no overdue purchase orders but purchase orders within the lead time (as shown on the projection tab). The lead time units of 162 in this case would not be included in the calculation because there is a purchase order due within the lead time.

This item has -4 units of available stock with a Stocked out figure of 49 units. The calculation here will then be available stock less accumulated demand (as per projection table) until the next purchase order arrives on 2 Sept.

-4 (available stock) - 45 (accumulated demand) = -49 (stocked out units)

In this case, the calculation still holds true. It would be the available stock less any demand accumulated until the day of the firm receipt (or duration of lead time).

Since the date of receipt is “today,” the accumulation of demand until the first purchase order will be 0.

-30 (available stock) - 0 (accumulated demand) = -30 (stocked out units)

To summarize, overdue purchase orders do not reflect on the units figure shown on the Status panel of an item. This is to ensure that the figure does not get misrepresented which may cause action to not be taken against a Stocked out item. For a view of what the stock holding would look like including the overdue purchase order, the Projection tab on the Inquiry screen may be used.

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