Question

Service level is:A) the probability of stocking out.B) the probability 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 shortage + the cost of overage) for single-period models.E) B and D

Answer 1

E) B and D

Step-by-step explanation:

Service levels are basically the term used to calculate the measures performance of the system. There are goals set, and the service level defines the percentage for which the goals shall be achieved.

The probability that the stock will not be less as compared to the level required.

The formula for calculating the service level is the cost of shortage divided by the total cost of shortage along with the total cost associated with the overage. This is because even keeping excess will be expensive.