Why stockouts make your sales velocity lie
Days with no stock to sell pull average daily sales down and lead to under-ordering. Here's how to adjust for them, with a worked example.
Stokrio Team · · 5 min read
If a product sold out for part of last month, last month's sales understate demand. Plan from the raw average and you'll order too little — and sell out again. It's one of the most common causes of repeat stockouts on best-sellers.
The problem
Simple velocity divides units sold by every day in the window:
naive velocity = units sold ÷ days in windowBut on days with no stock, sales were zero because there was nothing to sell, not because nobody wanted it.
The adjustment
Divide by the days the product was actually available instead:
adjusted velocity = units sold ÷ days in stockWorked example
A product sold 300 units in the last 30 days, but was out of stock for 10 of them. You have 150 on hand.
| Naive | Adjusted | |
|---|---|---|
| Days counted | 30 | 20 |
| Daily velocity | 10 | 15 |
| Days of cover for 150 units | 15 days | 10 days |
The naive view says you have two weeks. In reality you have ten days — possibly less than your supplier's lead time.
Caveats
- You need stock history. To count in-stock days you need to know what stock was on each day, not just today.
- Partial days and low stock. A product with one unit left often sells less than usual (limited sizes, hidden by the storefront). Some teams treat very low stock as "effectively out".
- Substitution. If customers bought a similar product while this one was out, adjusted demand for both is overstated. Review best-sellers by hand.
In Stokrio
Stokrio records end-of-day stock every night and treats out-of-stock days as missing demand rather than zero sales, so forecasts and reorder points aren't dragged down by sell-outs. See demand forecasting.