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Operations
Service level
Service level describes the target probability of meeting demand without a stockout.
Also known as
Cycle service level
Direct answer
What is Service level?
Service level describes the target probability of meeting demand without a stockout. Higher targets usually require more safety stock, so service levels should differ by SKU segment, margin, and customer expectation.
Practical example
A items receive a 98 percent target while 90 percent is more economic for slow-moving C items.
What teams should remember
Service level describes the target probability of meeting demand without a stockout.
Higher targets usually require more safety stock, so service levels should differ by SKU segment, margin, and customer expectation.