Which approach aids in meeting customer service expectations?

Utilizing appropriate safety factors in forecasting is critical for meeting customer service expectations because it directly impacts the ability to predict and prepare for customer demand accurately. Safety factors account for uncertainties in demand and supply, such as fluctuations in customer orders or delays in supply chain deliveries. By incorporating these safety factors into the forecasting process, a company can ensure that it maintains an adequate inventory level to meet customer needs, thereby enhancing service levels. This proactive approach minimizes the risk of stockouts and backorders, ensuring that products are available when customers want them.

When forecasting is done without adequate safety factors, companies may either overestimate demand, leading to excess inventory and associated holding costs, or underestimate demand, which can result in missed sales opportunities and dissatisfied customers. Therefore, an effective forecasting method that includes safety factors is essential for matching inventory levels with actual customer demand, thus directly supporting customer service expectations.