Fundamentals of Business

Several definitions of service levels are used

Several definitions of service levels are used in the literature as well as in practice. These may differ not only with respect to their scope and to the number of considered products but also with respect to the time interval they are related to. These performance measures are the Key Performance Indicators (KPI KPI) of an inventory node which must be regularly monitored. If the controlling of the performance of an inventory node is neglected, the decision maker will not be able to optimize the processes within a supply chain.

Service Level (Type 1)
The service level is an event event oriented performance criterion. It measures the probability that all customer orders arriving within a given time interval will be completely delivered from stock on hand, i.e. without delay.
Service Level (Type 2, also known as "fill rate")
The service level (fill rate) is a quantity quantity oriented performance measure describing the proportion of total demand within a reference period which is delivered without delay from stock on hand:
Service Level
The service level, a time and quantity related performance criterion, serves to reflect not only the amount of backorders but also the waiting times of the demands backordered.

Stock losses in logistics the diagram below illustrate the type of losses that can occur.

Inbound
Is concerned with inputs, the receiving, checking quantities and allocation of stock for replenishment. Outbound is concerned with outputs, picking, packing, consolidation, dispatch and returns. Receiving incorrectly occurs when the quantities received are recorded incorrectly or wrong stock.
For example
An order where there were supposed to be 100 items and you record 10 items or say 10mg Aspirin is not the same as 20mg Aspirin.
Damages
Harm or injury to a person, property, or system resulting in impairment or loss of function, usefulness, or value. Example
Broken, ripped off, wet e.t.c
Theft is the illegal taking of another person's property without that person's freely given consent. Obsolescence is the state of being which occurs when a person, object, or service is no longer wanted even though it may still be in good working order.
Picking incorrectly
This is mostly human error.
Example
Wrong items, wrong quantities
NOTE: It is important for any enterprise to carefully address all these issues; they can prove costly if overlooked.