Posted in Operations and Supply Chain Terms, Total Reads: 1755
Definition: Service Discipline
Service Discipline is a term used in Inventory Management which refers to the response that is made to a customer order in terms of fulfilling the demand on time in full quantity (OTF). A more common term used in this regard is called ‘service level’. It can be used both in the context of manufacturing & selling a product in the market and also rendering services to customers in the market.
Service level is the percent of orders that can be shipped immediately from the available stock without any delay. In service context, service level can be defined as the percent of times a customer is responded to with the service without any waiting time or delay.
The calculation of service level is based on lead time which is the time between the placing of an order and its delivery. This lead time is also a function of the demand and both are subject to variation, hence have the associated means & standard deviations. Usually service level is denoted by ‘α’. A 95% service level means 95% of the time the order can be fulfilled without delay.