Forecast accuracy improves dramatically when stockout days are understood correctly. The upcoming Sales Velocity (SV) model in IFH uses this logic to ensure your forecast reflects true demand rather than inventory limitations.
This article explains three important things:
What is the definition of "Out of Stock"?
Which days are considered out of stock (with examples).
How IFH determines the "day ending time" – and why it uses your store’s timezone.
Concept | Explanation |
Definition of Out of Stock | Day with inventory = 0 and no sales |
Days that are NOT stockout days | Days with sales (even if ending inventory is 0 |
How day-end is calculated | Day ends midnight of your Shopify store’s timezone (12 AM local time) |
Why this matters | Provides accurate Sales Velocity & prevents under-forecasting |
1. What is the Definition of "Out of Stock"?
A stockout day is a day when a product was completely unavailable for sale due to zero inventory, and no sales happened on that day. In simple words: If customers could not buy because inventory was 0, it is a stockout day.
Why this matters:
Including these zero-stock days in Average Daily Sales (ADS) reduces the average artificially, making the demand look lower than it actually was.
The Sales Velocity (SV) model fixes this by excluding such days.
2. Which Days Are Considered Out of Stock? (With Examples)
The IFH logic distinguishes between:
✅ A. Zero stock + no sales → OUT OF STOCK DAY
These are true stockout days because the product was not available, and customers could not buy it.
Example:
Ending Inventory = 0
Sales = 0
Result → Stockout day (excluded from valid days)
❌ B. Zero stock + sales occurred → NOT an out-of-stock day
If the inventory level is zero but sales still happen, this means the product did have demand, and the system should treat this as a valid sales day, not an out-of-stock day.
👉 We want your input:
How would you like the app to treat these cases?
For example, when sales occur despite zero or negative inventory (such as during preorders, backorders)
Example:
Ending Inventory = 0
Sales = 3
Result → NOT a stockout day
The 3 sales are included in total sales.
The day is included in the denominator of ADS/SV.
A table summarizing the stockout logic is below.
Ending Inventory | Sales on the Day | Is this a Stockout Day? | Count in Forecast? |
Out of Stock | No Sales Occurred | Yes | Do Not Count This Day in Forecast |
Out of Stock | Sales Occurred | No | Count This Day in Forecast |
In Stock | No Sales Occurred or Sales Occurred | No | Count This Day in Forecast |
In simple terms, a day is only considered a "Stockout Day" (and therefore excluded from the forecast) if the inventory was completely gone at the end of the day AND no sales were recorded that day.
Why this logic matters
By excluding only the true stockout days, IFH ensures your:
Average Daily Sales is not artificially lowered
Demand forecasting becomes more accurate
Stockouts don't repeat due to under-forecasting
3. Day Ending Timezone – Does IFH Use My Timezone?
Currently we have planned to use your store’s Shopify timezone when determining daily stock status.
This is important because:
Stockouts should be calculated based on your business day, not UTC or our server’s timezone.
Sales and inventory updates happen according to your local day.
Forecast accuracy depends on evaluating inventory at the correct "day end" moment.
How it works
IFH takes the end-of-day inventory status at 12:00 AM (midnight) using your Shopify store’s timezone.
For example:
If your timezone is GMT+5:30 (India) → Day ends at 12:00 AM IST
If your timezone is EST (UTC-5) → Day ends at 12:00 AM EST
This ensures consistency between:
Your Shopify sales reports
Inventory history
IFH’s stockout tracking
Forecast results