Question: In setting the reorder point for an item with variable demand, a service level of 95% will imply which of the following? Stockouts may occur

  1. In setting the reorder point for an item with variable demand, a service level of 95% will imply which of the following?

    Stockouts may occur only 5 times during the phase of 100 inventory cycles.

    5% of the supplier shipments will be late.

    There is a 0.05 probability that the forecasted demand is not accurate.

    The forecast demand will be accurate 95% of the time.

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