A company whose reorder point model includes a 95% desired service level will experience stockouts ________% of the time.

Question

Quizplus · Accepted Answer

A 95% desired service level means that the company wants to fulfill 95% of customer demand without stockouts. This leaves a 5% chance of stockouts, which is the probability of experiencing stockouts. Therefore, the company will experience stockouts 5% of the time.

A Company Whose Reorder Point Model Includes a 95% Desired