Final answer:
The service level in inventory management refers to the likelihood of meeting demand during lead time, not the stock-out risk or safety stock. It is a metric that helps businesses ensure product availability and customer satisfaction.
Step-by-step explanation:
In inventory management, the service level is the probability of being able to meet demand during lead time. This means it is a measure of how often the inventory system can provide the goods to the customer without experiencing stock-outs. A high service level indicates that there is a high probability of having stock available when it's needed, while a lower service level might indicate a greater chance of stock-outs and potentially unsatisfied customers.
Therefore, option b is correct: the service level is the probability of being able to meet demand during the lead time. The service level is not the same as stock-out risk, which is more about the probability of running out of stock. Furthermore, service level is also not the same as safety stock, which is the additional inventory kept to reduce the risk of stock-outs. Safety stock is a part of the inventory policy that helps to achieve a desired service level.