Service level can be measured by:
A)the probability that a stockout will not occur during lead time
B)The average number of stockouts per year
C)The average delay in filling backorders
D)The average percentage of annual demand that can be satisfied immediately
E)All of the above

Question

Service level can be measured by:
A)the probability that a stockout will not occur during lead time 
B)The average number of stockouts per year 
C)The average delay in filling backorders 
D)The average percentage of annual demand that can be satisfied immediately 
E)All of the above

Quizplus · Accepted Answer

All of the given options can be used to measure service level in different ways. The probability that a stockout will not occur during lead time gives an indication of the reliability of the supply chain to meet demand. The average number of stockouts per year shows how frequently customers are unable to find the items they want, which affects their loyalty and satisfaction. The average delay in filling backorders shows the time it takes to replenish inventory and implies lost sales opportunities. The average percentage of annual demand that can be satisfied immediately is a measure of the proportion of customer demands that can be met without delay or stockouts. Therefore, all options give valuable insights into the performance of the supply chain's service level.

Service Level Can Be Measured By