Lessons › Retail Supply Chain › Service and excess
Retail Supply Chain lesson
Service level
The business promises a 95% service level: at least 95% of ordered units shipped. Each market against it.
Try this lesson free →The idea
The business promises a 95% service level: at least 95% of ordered units shipped. Each market against it:
Formulas
Shipped ÷ Ordered − 95%Key points
Service levelThe fill rate the business promises its customers, often 95% or more.
Work it outTake the target away from the fill rate. Below zero means the promise was missed.
Why not 100%?Holding enough stock for every possible order costs a lot. 95% balances service against stock.
Service level is the promise. Fill rate is what happened. Report the gap between them.
Practice
1. Tap a market below the 95% service level.
Canada (75%) and Australia (92%).2. What is Canada's gap to the 95% service level (fill rate − 95%)?
75% − 95% = −20 points3. In E6, work out Australia's gap to the 95% target: fill rate − 0.95.
=D6-0.954. Why don't most businesses aim for a 100% service level?
It means holding a lot of extra stock, which ties up cashLearn it by doing. This lesson is a short hands-on level on Bampaa: see it work, then build and write it yourself, with instant feedback.
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