Thursday, June 16, 2016

Customer service level in supply chain

The core function of supply chain planning models is to coordinate materials and resource release decisions in the supply chain such that predefined customer service levels are achieved with minimal costs.

Safety stocks are kept to deal with demand uncertainties and consequently to increase service levels. The service level is an increasing function of the safety stock level.

Customers demand a single product from the finished goods warehouse. The finished goods warehouse sees a real customer demand and fulfils customers orders form the inventory on hand.

Inventory control is based on reorder point policy (min-max algorithm) in the finished goods warehouse. If it is necessary to replenish existing inventories, orders are placed to the production facility. Unmet customer demand is lost and hence the customer service level is decreased.

There are nine most important aspects of customer service were:
*On-time delivery
*Order accuracy
*No product damage
*Ease of order placement
*Customer enquiry handling
*Order status information
Customer service level in supply chain

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