Service Level:

Service level is used in supply chain management and in inventory management to measure the performance of inventory systems. This basically tells number of days or period till which one will be out of stock and thus have to wait for the supplier to supply the product. Hence, one will be able to measure inventory systems performance.

UPS:
When demand is high i.e. particularly at Christmas time UPS need to tighten their service also otherwise the service level will be low as compared from earlier during normal demand. So, when the demand increases the service level will go down as the company isnt aware about sudden increase. In case of service industry we can change the above formula to:

SL= No. Of units to be serviced No. Of service delays / No. of units to be served

PORSCHE:
In case of Porsche also its seen in India during 2010 that service level has gone down as there was sudden increase in demand (demand just doubled). This resulted in customers waiting for delivery of the car in time. And the company wasnt able to do anything because it was facing stock out.

Inventory Models:
Fixed order quantity models Economic order quantity Quantity Discounts Production order quantity

Probabilistic models

Fixed order period models

1) FIXED ORDER QUANTITY): UPS:

In first kind of models i.e. Fixed Order Quantity Models the demand should be known in advance as well as there should be constant demand but in the case of UPS it is not so as we have saw that demand increases during a particular period and for that company deal differently. So, this model is not applicable here.

PORSCHE:
In case of Porsche also we have seen that the demand doesnt remain same throughout and hence this model cant be applied here.

2) PROBABILISTIC MODEL:
In probabilistic models the demand can vary and because of this companies should maintain high service level to ensure less stock outs resulting in smooth working according to the fluctuations in demand. High service order means that companies should increase their safety stock also.

PORSCHE:
Porsche work on the concept of JIT so as to reduce waste. Now, waste can be overproduction, transportation, waiting, inefficient production etc. So, although there is fluctuation in the demand Porsche trust their suppliers that they will supply the raw materials whenever required. But, this sometimes does not happen as we have seen in India as the demand increased the delivery time also increased.

UPS:
To cater to the increased demand they maintain over 35 million square feet of distribution and warehousing facilities, strategically located at approximately 1,000 sites in more than 120 countries. This allows for optimal staging of their inventory, which helps speed transit and lower overall transportation costs. One will get the right amount of product to the right places at the right time to meet demand.

So, we see that to cater to the demand UPS they have opened their sites in more than 120 countries i.e. increased them to the optimal level so as to reach to the customers quickly. But, still due to certain conditions sometime they doesnt able to serve on time for eg: Due to recent earthquakes in Japan and New Zealand there are service delays. In addition to this, UPS integrate with existing IT system to enhance its capabilities. They can, for example, enable to get frequent snapshots of warehouse movements, track serial numbers or expiration dates, upload distribution mailing lists, confirm shipments, and more.

Inventory management services they provide to their clients include:

Inventory control. Inventory visibility. Unique inventory storage environments. Data and physical security. Reporting, measurement, and compliance.

DISTRIBUTION

Distribution Fast-Turn Fulfilment Advantages:

Position products closer to your customers. Their network of facilities enables optimal staging of inventory and helps reduce time-in-transit and overall transportation costs. Through their distribution network, they can reach 99% of the U.S. population in two days via UPS Ground delivery.

3) FIXED ORDER PERIOD MODELS:

In this model there is inventory check at particular period of time and hence there is a possibility of stock outs in between this period. In this order amount varies according to the consumption i.e. the amount which get consumed during that period.

PORSCHE:
We have already seen that Porsche follows JIT and hence there is no need for this model. As, in JIT company orders what is required at particular time and so they cant follow this model.

UPS:
UPS cant use this model as in UPS there is continual demand and they depend on periods. They need to look to their demand i.e. number of units to be serviced on daily basis to reach to their customers on time.