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If the in-stock rate is 95%, then...?

a) stockouts are observed in 95% of all order cycles
b) 95% of total consumer demand is filled from on-hand inventory
c) there will be no stockout occurances in 95 out of 100 order cycles
d) the dwell time will be 95 days

User Hleb
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1 Answer

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An in-stock rate of 95% means that 95% of consumer demand is met with on-hand stock, with potential stockouts occurring in 5 out of 100 order cycles. It is unrelated to customer arrival rates or queueing theory metrics.

If the in-stock rate is 95%, then 95% of total consumer demand is filled from on-hand inventory. This does not necessarily mean that there will be no stockouts; it implies that over many order cycles, only 5% of the demand will not be immediately fulfilled from the stock available. In practical terms, for every 100 order cycles, there might be stockouts in 5 cycles assuming demand levels are consistent.

In the context of queueing theory and customer arrival rates as implied by the reference information, the in-stock rate does not directly relate to the frequency of customer arrivals. For instance, knowing that one customer arrives every two minutes on average does not impact the in-stock rate, as the in-stock rate is a measure of inventory management rather than customer service metrics.

a 95% in-stock rate mainly addresses the effectiveness of an inventory system and its ability to meet consumer demand directly from the current stock. It is a key performance indicator in supply chain management and operational efficiency but does not reflect the timing of customer arrivals or service levels.

User Ristogod
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