As the service level increases, the probability of not running out of stock during a cycle decreases.

Question

Quizplus · Accepted Answer

This statement is true. As the service level increases, the probability of not running out of stock during a cycle also increases. A higher service level means that a company is aiming to meet a greater percentage of customer demand, which typically requires holding higher levels of inventory. With more inventory on hand, there is a lower probability of running out of stock during a given cycle.

As the Service Level Increases, the Probability of Not Running