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Service Level
The target probability of meeting demand without a stockout.
- Area
- Inventory
- Also known as
- cycle service level
- In this area
- 44 terms of 259
Service level is the deliberate choice of how often you are willing to run out. A 95% service level means accepting a stockout in roughly one replenishment cycle in twenty.
It is the input that sets safety stock: each step up in service level costs disproportionately more inventory, so the last few percentage points are the expensive ones.
How it is calculated
Safety stock = Z(service level) × σ_LT
Z is 1.65 at 95% and 2.33 at 99% — the cost of certainty rises steeply.
Service Level is not just a definition here
Inventory runs on this vocabulary every day in AWRA OpsHub — 44 of our 259 glossary terms describe things the platform actually does.