Adjusting Usage for Lost Sales
- Topics:
- Inventory Management
- Tags:
- Sales,
- Sales Force Management,
- Sales Strategy,
- Usage
- Source:
- Effective Inventory Management
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Overview: A customer requests a product and it's not in stock. They can't wait for you to obtain the item so they purchase it elsewhere. You've lost a sale. That means you have lost the opportunity to earn a profit, disappointed the customer, and probably put some doubt in his or her mind about your reliability as a supplier. A lost sale is not a good thing. But a lost sale is made even worse if you don't use it as an opportunity to evaluate and possibly revise the replenishment parameters for a product that is, to try to prevent future lost sales. Indeed, many companies try to capture all unfulfilled customer requests and add them to the actual usage recorded for a specific inventory period. They believe that by including these lost sales in usage history, future demand forecasts will be adequate to cover the unfulfilled sales or usage experienced during the current inventory period. But there are some inherent flaws in this practice. Read to know what are what are those flaws.
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Format: HTML | Date: Jan 2002 | Pages: 1
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