Council of Supply Chain Management Professionals (CSCMP) 2025 – 400 Free Practice Questions to Pass the Exam

A stockout event is best defined as a situation where the inventory is completely exhausted. This means that the items needed for sale or production are unavailable. When a company experiences a stockout, it cannot fulfill customer orders, which can lead to lost sales, dissatisfied customers, and potential harm to the company's reputation. Understanding this definition highlights the importance of inventory management strategies that aim to prevent stockouts by maintaining optimal stock levels and ensuring timely replenishment.

While the notion of reaching a critical low is indicative of potential issues in inventory management, it does not encapsulate the full meaning of a stockout, as an inventory can be at a low level without being entirely depleted. The inability to forecast demand accurately might contribute to a stockout scenario, but it does not define what a stockout actually is. Additionally, an excess of inventory is clearly the opposite of a stockout, which focuses exclusively on the complete lack of inventory.