Keeping all other factors equal, a company typically will try to maintain higher service levels for products with:

Keeping all other factors equal, a company typically will try to maintain higher service levels for products with:

A. wider variety.

B. shorter lead time.

C. higher profit margins.

D. lower sales volumes.

View Answer

Answer: C

Explanation:

Context: Companies often prioritize service levels based on the profitability of their products.

Options Breakdown:

A. Wider variety: While a wider variety can attract more customers, it does not directly influence the prioritization of service levels.

B. Shorter lead time: Short lead times are desirable but not the primary reason for maintaining higher service levels.

C. Higher profit margins: Products with higher profit margins contribute more significantly to the company’s bottom line, justifying higher service levels to ensure customer satisfaction and repeat business.

D. Lower sales volumes: Lower sales volumes typically do not warrant higher service levels due to their limited impact on overall profitability.

Correct Answer Justification: Companies aim to maintain higher service levels for high-margin products to maximize profitability and customer retention.

Reference: Supply chain management textbooks

Industry practices on service level prioritization