A firm decides to target a 95% service level,realizing that this will require significantly less inventory as compared to a 99% service level.This is an example of a

Question

Quizplus · Accepted Answer

This is an example of a cost-to-service trade-off, where the firm decides to accept a lower service level (95% instead of 99%) in order to reduce inventory costs. This decision involves balancing the cost of providing a certain level of service (in this case, product availability) against the cost savings from holding less inventory.

A Firm Decides to Target a 95% Service Level,realizing That