Michael’s Office Supply (MOS) sells office furniture, equipment, and supplies. This week the company has received 50 customer orders. Each order has an average of five line items. The average dollar amount of each order is $1200. MOS was able to ship 47 of the 50 orders on schedule.
(a) Using the percentage of orders shipped on time, calculate the customer service level.
(b) If Michael’s calculates customer service level by using the percentage of line items shipped on schedule, how many line items must be shipped to achieve the same customer service level calculated in part (a)?
(c) If Michael’s calculates customer service level by the percentage of dollar volume shipped, how many dollars of product must be shipped to achieve the same customer service level calculated in part (a)?
(d) What factors determine the customer service level measure that MOS should use?