Lost Sales Value#
Revenue forgone when demand cannot be met from available stock.
Important
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What it is#
Lost Sales Value is the monetary value of sales that could not be realised because products were out of stock or unavailable when customers wanted them. It puts the dollar impact on stockouts, going beyond the percentages of stockout rate or fill rate. High lost-sales value means serious revenue leakage; low means sound inventory and demand planning.
The formula#
or equivalently the total demand value (demand units times price) minus the actual sales value (fulfilled units times price).
A worked example#
A customer wants 500 units but only 450 are in stock, so 50 go unfilled. At $20 each, the lost
sales value is 50 × 20 = $1,000 — a thousand dollars of revenue forgone to the stockout.
Why it matters#
It shows the money lost directly, drives customer-loyalty concerns, informs the inventory
cost versus service level trade-off, and prioritises the SKUs whose stockouts hurt most (typically
high-margin ones). Alongside its percentage cousins — stockout rate (how often) and fill rate (how
much is filled) — lost sales value answers how much revenue is actually lost: a snapshot might read
5% stockout, 95% fill, and $50,000 lost.
Theme: Operations & Supply Chain · All terminology
Hint
Mind map — connected ideas
Stockout Rate · Fill Rate · Backorder Rate · Safety Stock · Ops Health Dashboard · SLA Breach Rate
Hint
More in Operations & Supply Chain
Backorder Rate · Crew Overtime · Demand Forecasting · Fill Rate · Long Lead Times · Long-Tail Items · Overstock % · Real-Time Inventory Tracking · Reorder Point (ROP) Optimization · Safety Stock · SKU · Slow-Moving SKUs · Stockout Rate · Stockouts
See also
Source article Adapted (context, re-expressed) in our own words from: Lost Sales Value (insightful-data-lab.com).