Which one of the following is implied by a "lead time" service level of 95 percent?
A) Approximately 95 percent of demand during lead time will be satisfied.
B) The probability is 95 percent that demand during lead time will not exhaust the inventory.
C) The probability is 95 percent that demand during lead time will exactly equal the amount on hand at the beginning of lead time.
D) The probability is 95 percent that demand during lead time will not exceed the amount on hand at the beginning of lead time.
E) None of the choices.

Question

Quizplus · Accepted Answer

A lead time service level of 95 percent implies that there is a 95 percent probability that demand during lead time will not exceed the amount on hand at the beginning of lead time. This means that the inventory level is able to satisfy at least 95 percent of demand during lead time.

Which One of the Following Is Implied by a "Lead