As the service level increases,
A)safety stock increases at a decreasing rate.
B)safety stock increases at an increasing rate.
C)safety stock decreases at an increasing rate.
D)safety stock decreases at a decreasing rate.
E)None of the above

Question

Quizplus · Accepted Answer

As the service level increases, the probability of stockouts decreases, but when a stockout occurs, it is typically for larger quantities. Therefore, safety stock needs to increase at a faster rate to accommodate for the larger potential stockouts.

As the Service Level Increases