Cycle-Service-Level in Guaranteed-Service supply chains

The Guaranteed-Service Model (GSM) aims at determining the optimal placement and amount of safety stocks in a guaranteed-service supply chain. In the GSM, safety stocks are used to protect against demand variability up to specified demand bounds. The model does not address what happens when demand exceeds these bounds while in practice, companies might take extraordinary measures to handle the excess demand. For guaranteed-service supply chains, assessing the service level that results from carrying safety stocks is crucial to estimate the real frequency of extraordinary measures to be deployed. In the GSM literature, demand bounds are usually defined in terms of Cycle-Service-Level (CSL). Simulation studies we carried for realworld supply chains show that the effectively observed CSL at final customer stages may be less than the one used to define the demand bounds and the absolute gap may be up to 4.76%.