Service definition

Safety Stock Optimization supports three distinct service definitions:

• Type 1 (Probability of Not Stocking Out)
• Type 2 (Quantity Fill Rate)
• Type 2 (Undershoot)
• Type 3 (Ready Rate)

The service definitions are applied to the inventory replenishment process:

1. Inventory is used up until it hits the Reorder Point (ROP).
2. An order is placed for a specific amount of product (the Replenishment Order Size).
3. Inventory continues to go down as the replenishment order is processed and shipped (Lead Time or Risk Period).
4. If the site runs out of inventory, this is called a shortage or stockout.
5. The replenishment order arrives and the process begins again.

The Replenishment Cycle is the period of time between two replenishment orders.