Question 195 - CSCP discussion

The most appropriate customer-facing goal to determine the target inventory level is the level of service because:

Customer Expectations: The level of service directly reflects the ability of the supply chain to meet customer expectations in terms of product availability and delivery reliability.

Service Level Metrics: Service levels are typically measured by metrics such as fill rate, order accuracy, and on-time delivery. These metrics help determine how well the inventory levels support customer demand without stockouts.

Balancing Costs and Service: Maintaining an optimal level of service ensures that the company balances inventory costs with the need to meet customer requirements. High service levels often lead to increased customer satisfaction and loyalty.

Inventory Management: Setting inventory levels based on the desired level of service helps in creating a responsive supply chain that can quickly adapt to changes in demand while minimizing excess inventory.

Inventory turns (Option A) are more focused on internal efficiency rather than customer satisfaction. Total delivery cost (Option C) is a cost-focused metric and may not reflect service adequacy. Delivery lead time (Option D) is important but is one component of service level rather than a comprehensive measure.

'Inventory Management and Production Planning and Scheduling' by Edward A. Silver, David F. Pyke, and Rein Peterson.

'Supply Chain Management: Strategy, Planning, and Operation' by Sunil Chopra and Peter Meindl.