How do you calculate the cost of a stockout?

Multiply lost units by margin per unit and by the fraction of demand truly lost, then add fixed costs. For 100 units at $45 margin, 80% capture, plus $250 fixed, that's 100 x 45 x 0.80 + 250 = $3,850.

What should the capture factor be?

It's the share of stockout demand that walks away for good rather than backordering or substituting. Commodity items with easy substitutes run high (80-100%); differentiated products where customers wait run lower (20-50%).

Why use margin instead of price for lost units?

A lost sale costs you the profit you would have earned, not the full sticker price — you never incurred the cost of goods for units you didn't sell. Using the $45 margin gives the true bottom-line hit.

What is the fixed cost adder for?

It captures one-time expenses that a stockout triggers regardless of unit count — expedited freight, overtime, goodwill credits, or an emergency PO fee. In the example that's a flat $250.

How does stockout cost compare to carrying cost?

Carrying cost is what you pay to hold safety stock; stockout cost is what you pay when you don't. If the $3,850 stockout hit recurs often, it likely justifies carrying more inventory to prevent it.

What is the per-unit stockout cost?

Divide total cost by lost units. Here $3,850 over 100 units is $38.50 per unit, which includes the spread of the fixed adder across the lost volume.

Supply Chain & Procurement calculator

Stockout Cost Calculator

The stockout cost calculator quantifies what an out-of-stock event actually costs by combining the margin on lost sales with a realistic capture factor and any fixed expediting or goodwill expense. Supply chain planners and inventory managers use it to justify safety stock, faster replenishment, or a second supplier — decisions that are hard to fund when 'lost sales' feel invisible. Because not every stockout unit is a truly lost sale (some customers backorder or substitute), the capture factor keeps the estimate honest. The output turns an intangible service failure into a dollar figure you can weigh against carrying cost.

What this calculator does

Estimate stockout cost from lost units, contribution margin, and expedite cost.
Use it when stockout cost in supply chain and procurement is being put through a supply chain and procurement weighted-cost review.
It computes the total cost of a stockout as lost units times unit margin times the fraction of demand actually lost, plus a fixed cost adder.

Formula used

Weighted cost = quantity × rate × capture factor + fixed adjustment

Inputs explained

Lost sales units during stockout:
Gross margin per lost unit:
Share of demand truly lost (not backordered):
Fixed expediting and goodwill cost:

How to use the result

Use it after a stockout to size the damage, or before one to build the business case for safety stock or expedited freight.
The capture factor is an estimate of customer behavior — if you assume 80% of demand is lost but customers actually backorder, you'll overstate the true cost.

Current U.S. benchmarks

U.S. manufacturing runs at 75.6% of capacity (Federal Reserve, May 2026). New factory orders are up 2.3% year over year (Census).
Sourcing currencies as of 2026-07-02 (Federal Reserve H.10): 6.7886 CNY and 17.4524 MXN per USD. Landed-cost comparisons move with these daily rates.
U.S. iron and steel imports ran $2.1B in May 2026 (Census International Trade). The U.S. ran a trade deficit of $0.4B in the category that month. Import volumes are the pressure gauge behind tariff and reshoring decisions.

Common questions

How do you calculate the cost of a stockout? Multiply lost units by margin per unit and by the fraction of demand truly lost, then add fixed costs. For 100 units at $45 margin, 80% capture, plus $250 fixed, that's 100 x 45 x 0.80 + 250 = $3,850.
What should the capture factor be? It's the share of stockout demand that walks away for good rather than backordering or substituting. Commodity items with easy substitutes run high (80-100%); differentiated products where customers wait run lower (20-50%).
Why use margin instead of price for lost units? A lost sale costs you the profit you would have earned, not the full sticker price — you never incurred the cost of goods for units you didn't sell. Using the $45 margin gives the true bottom-line hit.
What is the fixed cost adder for? It captures one-time expenses that a stockout triggers regardless of unit count — expedited freight, overtime, goodwill credits, or an emergency PO fee. In the example that's a flat $250.
How does stockout cost compare to carrying cost? Carrying cost is what you pay to hold safety stock; stockout cost is what you pay when you don't. If the $3,850 stockout hit recurs often, it likely justifies carrying more inventory to prevent it.

Last reviewed 2026-05-12.