Service level is
A) the chance of stocking out
B) the chance of not stocking out
C) something that should be minimized in retail
D) calculated as the cost of a shortage divided by (the cost of overage + the cost of shortage) for single- period models
E) B and D

Question

Quizplus · Accepted Answer

Service level is the probability of not stocking out and is important in inventory management. It can be calculated using the cost of a shortage divided by (the cost of overage + the cost of shortage) for single-period models. Therefore, the correct answer is E - "the chance of not stocking out" (B) and "calculated as the cost of a shortage divided by (the cost of overage + the cost of shortage) for single-period models" (D) are both true statements about service level.

Service Level Is