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. the probability of not stocking out and calculated as the cost of a shortage divided by (the cost of shortage the cost of overage) for single-period models

Answer 1

b. the probability of not stocking out.

Explanation:

Service level is a measure of the effectiveness of a system in satisfying the clients requirements.

If we are talking about an inventory system, the service level is equivalent to the probability of fulfilling all the orders within the period considered.

From the options available, the one that correspond to this idea is option b: the probability of not stocking out.