Hello everyone
I am little confused of the calculation of the service level calculation.
can any one share the formula or explain the logic ?
thank you
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Hello Alaa,
There is a good definition in the Dictionnary, the calcul may vary:
"service level–A measure (usually expressed as a percentage) of satisfying demand through inventory or by the current production schedule in time to satisfy the customers’ requested delivery dates and quantities. In a make-to-stock (MTS) environment, service level is sometimes calculated as the percentage of orders picked complete from stock upon receipt of the customer order, the percentage of line items picked complete, or the percentage of total dollar demand picked complete. In make-to-order (MTO) and design-to-order (DTO) environments, service level is the percentage of times the customer-requested or acknowledged date was met by shipping complete product quantities. Syns.: level of service, measure of service. See: cycle service level."
So it basically measures the ability to meet customer demand, considering the customer is satisfied if the order is sent in full on the desired or agreed / quoted date.