Advanced Low Stock

IPO finds each uninterrupted run of days with periods where average inventory selling days falls below the desired threshold. Average forecast demand for the week is used to smooth the common peaks and valleys of demand that occur throughout the week. A unit threshold can also be set as an absolute low stock minimum.

Days of supply: beginning inventory รท average daily forecast demand.

Alert if:

  • Days of Supply < days of supply threshold and/or
  • If Inventory BOP < inventory unit threshold and
  • count of days with low days of supply and/or inventory > Concurrent Days Lost Sales threshold

Important notes:

  • If average forecast demand is 0 no alert is raised.
  • In order for a day to count as 'low stock' the day must meet the Days-of-supply and inventory unit thresholds conjunction and criteria. This means it is non-sensical to setup criteria as Days of Supply < x OR units < y OR concurrent days > w The (Days of supply or Units thresholds) will always be true before a concurrent days count can be "OR"ed having no effect on the result.

A higher days-of-supply or inventory minimum catches low stock sooner; a higher consecutive-days threshold filters out brief dips.

Example: average forecast demand is 10 units per day and beginning inventory is 15 units. Days of supply is 1.5. A rule set to 2 days of supply qualifies as low stock; If the inventory threshold is 20 units, the same day also qualifies as low based on the unit threshold. With AND, both selected measures must pass; with OR, either can pass.