As service level increases, expected number of stockouts ________ and safety stock ________.
A) increase, increases
B) decrease, decreases
C) decrease, increases
D) increase, decreases

Question

Quizplus · Accepted Answer

As service level increases, the expected number of stockouts decreases because a higher service level means a higher probability of meeting demand. However, to achieve this higher service level, safety stock must increase to buffer against variability in demand or supply.

As Service Level Increases, Expected Number of Stockouts ________ and Safety