Shortage (or Stockout) costs

Shortage (or Stockout) costs

1) The economic consequences of an external or internal inability to meet a demand from stock. External impacts can include backorder costs, present profit loss from lost sales and future profit loss from loss of goodwill and reputation.

Internal impacts can include lost production, production rescheduling and delays in completion dates. (Source: ILTSupply-Chain Inventory Management SIG)

Source: David Lowe. The Dictionary of Transport and Logistics. Kogan Page, 2002. – P.221 (288 p.)