“A measure of the ability of an organisation to supply customers without delay” is the best defini-tion of which of the following:

“A measure of the ability of an organisation to supply customers without delay” is the best defini-tion of which of the following:
A . Re-order level
B. Service level
C. Key performance indicator
D. Safety stock

View Answer

Answer: B

Explanation:

In inventory management, service level is the expected probability of not hitting a stock-out during the next replenishment cycle or the probability of not losing sales.

Key performance indicators (KPIs) can be used to analyse data based on performance objectives and set actionable goals for improvement. KPIs can be developed in conjunction with suppliers as well as others, and can be used to measure the essential elements of the process.

Safety stock is the amount of inventory a business needs to have to achieve a certain level of risk mitigation when it comes to stockouts.

Reorder level (or reorder point) is the inventory level at which a company would place a new order

or start a new manufacturing run.

Reference: CIPS study guide page 131

LO 2, AC 2.3