Inventory cost increases at an accelerating rate as the customer-service level approaches 100 percent.

Question

Quizplus · Accepted Answer

As the customer-service level approaches 100 percent, the inventory cost increases at an increasing rate due to the need for safety stock to ensure the availability of products. This means that the cost of maintaining inventory becomes more expensive as the goal of perfect customer service becomes closer to achieving.

Inventory Cost Increases at an Accelerating Rate as the Customer-Service