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Practice Summary: Intel Calculates the Right Service Level for Its Products

Author

Listed:
  • Dennis Arnow

    (Independent Consultant, San Carlos, California 94070)

  • Sean P. Willems

    (Haslam College of Business, University of Tennessee, Knoxville, Tennessee 37996)

Abstract

All too often, companies do not rigorously calculate service levels. Instead, they arbitrarily set service levels by employing a top-down mandate. They employ this arbitrary approach because they have difficulty in quantifying the economics of a specific service level; the primary difficulty these companies encounter is quantifying the cost of not satisfying demand. Intel’s Customer Fulfillment and Logistics Group has developed a data-driven approach to calculate customer service levels. The major breakthrough in this work is a simple three-step process that diverse functions across the supply chain can employ to agree on the costs associated with a given service level.

Suggested Citation

  • Dennis Arnow & Sean P. Willems, 2017. "Practice Summary: Intel Calculates the Right Service Level for Its Products," Interfaces, INFORMS, vol. 47(4), pages 362-365, August.
    • Handle: RePEc:inm:orinte:v:47:y:2017:i:4:p:362-365
    DOI: 10.1287/inte.2017.0893
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    References listed on IDEAS

    as
    1. Matthew P. Manary & Sean P. Willems & Alison F. Shihata, 2009. "Correcting Heterogeneous and Biased Forecast Error at Intel for Supply Chain Optimization," Interfaces, INFORMS, vol. 39(5), pages 415-427, October.
    2. Brian Wieland & Pat Mastrantonio & Sean P. Willems & Karl G. Kempf, 2012. "Optimizing Inventory Levels Within Intel's Channel Supply Demand Operations," Interfaces, INFORMS, vol. 42(6), pages 517-527, December.
    3. Muhittin Oral & Michael S. Salvador & Arnold Reisman & Burton V. Dean, 1972. "On the Evaluation of Shortage Costs for Inventory Control of Finished Goods," Management Science, INFORMS, vol. 18(6), pages 344-351, February.
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