Hi @Luna ,

Standard best practice to use the service rate as 95% initially and later you can change it as per the business needs.

Service rate is  the probability of satisfying the demands/needs within the Leadtime.

Regards,

Mithun K V

Hi Mithun,

Thankyou for the reply. Best practice would be to apply 95% across all three ABC class products rather than 95% for A class and a slightly lower percentage for B&C class items?

Regards

Luna

Hi @Luna ,

The service rate is the probability of stock out situation for a part which can be managed without affecting the demand needs. This is usually be calculated as {(annual demand – tolerable stock out)/annual demand}

So, if the parts are easily available, have a shorter lead time and if the suppliers are reliable then you go with a less service rate as this value directly impacts the safety stock. As A class items are fast moving and critical you can have high service rate and for B & C you can reduce it accordingly

Regards,

Mithun K V