Management is willing to tolerate one stockout every 2 years for a specific item. If 10 orders are placed for the item each year the service level desired is:
A) 80%
B) 85%
C) 90%
D) 95%
E) none of the above

Question

Quizplus · Accepted Answer

To tolerate one stockout every 2 years with 10 orders per year, the service level is calculated as 1 - (1 stockout / 20 orders) = 0.95 or 95%.

Management Is Willing to Tolerate One Stockout Every 2 Years