Towards a value-in-use view of retail stockout costs

Abstract

PurposeThe purpose of this perspective paper is to theorize a more comprehensive view of retail stockout costs and explore the potential operationalization of this perspective for improved supply chain decisions and resulting performance.Design/methodology/approachThe retail stockout literature is reviewed to summarize the current types of out-of-stock costs. Theoretical foundations of Service Dominant Logic are suggested as a more holistic, accurate and useful view for stockout cost conceptualization. Market Basket Analysis and Real Options Analysis are identified as tools to help operationalize a revised value-in-use approach to stockout costs.FindingsThis research enhances our understanding of stockout costs and corresponding managerial actions with meaningful implications for retail supply chain performance.Originality/valueThis research deviates from traditional inventory theory to provide a unique perspective on stockout costs that is conceptualized within the literature and operationalized with the novel combination of cross-functional analytical tools.