Lost sales

Lost sales unless there is a contrac t with a penalty... 

Late drawings/technical queries/ tooling delays/errors/shop overload/ out of sequence/overtime/concessions/ shortages/excess work in progress/excess inventory/poor supplier quality/penalty clauses/ lost sales/poor management... 

Cost of business interruption. The cost of business interruption is significantly influenced by various commercial factors. For example, if you are not producing at fiill capacity it may be possible to make up lost production at other facilities or when the plant comes back into operation. The business interruption costs will only be the additional costs of production, transportation and any lost sales. As these conditions can vary from month to month it may be more appropriate to adopt a standard method of calculating business interruption costs for PSM and ESH purposes. One commonly adopted approach is to estimate the tonnage of production lost and calculate the cost as being the difference between the sale price and all manufacturing, storage and transportation costs. 

The term loss prevention is an insurance term, the loss being the financial loss caused by an accident. This loss will not only be the cost of replacing damaged plant and third party claims, but also the loss of earnings from lost production and lost sales opportunity. 

In addition, because of improved service levels, SCM can make a significant contribution towards preventing lost sales and become a strategic factor for differentiation, enhanced customer value propositions, and market share gains. 

As stated previously, having too much product ties up a pharmacy s money without providing an adequate return on investment. On the other hand, having too little product may result in lost sales and profits when the product is not available when consumers want to make a purchase. Not having enough product available also inconveniences pharmacy staff and customers and may result in the loss of customers in the future. Thus, not only is having the right product critical to inventory... 

The phrase loss prevention in the chemical industry is an insurance term where the loss represents the financial loss associated with an accident. This loss not only represents the cost of repairing or replacing the damaged facility and taking care of all damage claims, but also includes the loss of earnings from lost production during the repair period and any associated lost sales opportunities. 

In Rite-Hite v. Kelley (203), the Court of Appeals for the Federal Circuit held that lost profits on unpatented products that directly compete with the infringing product are recoverable if the lost sales were reasonably foreseeable. The patentee in Rite-Hite made a product covered by its patent and a higher priced unit that was not covered. The allegedly infringing product was intended to compete with the unpatented unit. The Federal Circuit held that the patentee was entitled to recover profits it lost on diverted sales of the unpatented unit as compensationforthe infringement. 

Accidents can be very expensive, not just in plant replacement costs, but also compensation to victims (as well as lost profits from lost sales). When operators at General Chemical s Richmond, California, plant overheated a railroad tank car, a safety relief valve sent fuming sulfuric acid over the area. More than 20,000 people sought medical treatment. Five freeways and several rapid-transit stations closed. A fund of 92.8 million dollars has been set up to compensate the victims.149 A re-... 

Do you have a standard cost for an out of stock situation (for example, cost of lost sales, cost of back orders, etc.) ... 

Lost Sales Alternatively, suppose that demands that cannot be met from stock are lost. 

MIGI IKj or the MIGIXIKj model, with the adjusted service time Lj as discussed above. Note that in this case we have a combination of back order and lost sales for external demand. 

A 400 million upgrade to Nike s supply chain systems resulted in 100 million in lost sales and a 20 percent stock dip. The reason given by Philip Knight, then Nike s chairman and CEO, was "complications arising from the impact of implementing our new demand and supply planning systems and processes. 

Consider a standard newsvendor with a procurement cost c and sell to his customers at a fixed unit price r. The customer demand D follows a probability density function (PDF)y(-) and a cumulative density function (CDF)F(-). The newsvendor has only one order opportunity and determines his order quantity before the actual demand is realized. If the newsvendor underorders, he will suffer lost sales. For simplicity, we assume zero shortage cost throughout the chapter. If he over-orders, he will dispose the unsold inventory at salvage price v, which leads to a loss as well. Moreover, the newsvendor has a preset target profit of t, and his objective is to choose an order quantity g to maximize the probability of achieving the target to maximize P (q) = P U(q)>t. ... 

The important thing to understand is that asset velocity should be the result of making improvements in operational velocity—reducing time and increasing frequency. Without these underlying changes, inventory reduction will only result in lost sales and poorer customer service. 

Reduction of unseen lost sales profit leaks. Reducing lost sales requires adequate supplies to meet demand. Products produce no profit if the sale is lost due to a stock-out. 

Lost sales are not estimated and tracked. No one is accountable for them. 

This line of thinking, Fisher argues, is dangerous if the type of product — functional or innovative — is not considered. For innovative products, this approach is particularly flawed. Fisher recommends consideration of market mediation costs in designing supply chains. Market mediation costs result from mismatches in demand and supply. And it is the core SCM mission to match these. This is particularly difficult because forecasting demand for innovative products is difficult, and disconnects between supply and demand result in market mediation costs. If there is too much product, the price must be marked down. If there is too little product, the company incurs another cost, the cost of lost sales. 

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