Out-of-shelf trilemma

Published on by Joannes Vermorel.

Shopping Cart logo Most people are familiar with the notion of dilemma when two possibilities are offered neither of which being acceptable. Safety stock analysis is a classical mathematical dilemma: you can choose between more stocks or more stockouts, yet both of them generate extra costs.

However, it exists situations where the trade-off is more complex in the sense there are more than 2 unfavorable options to balance. When there are 3 unfavorable options to be balanced, the situation is called a trilemma.

Out-of-shelf (OOS) monitoring, ala Shelfcheck, is facing a trilemma when it comes to the quality of the alerts being delivered:

  • Sensibility, the percentage of OOS problems being captured.
  • Precision, the percentage of true alerts within all OOS alerts.
  • Latency, the delay between then start of the OOS problem and the alert.

Pick any two, but you can't have them all. In fact, for any given demand forecasting accuracy, improving any of those 3 metrics come at the expense of the 2 other metrics.

Categories: insights, on shelf availability, retail Tags: insights oos out-of-shelf retail No Comments