Maintenance & Stores
The service level is not a policy choice. It falls out of the holding cost against the stockout cost.
— units
Smallest whole stock whose Poisson cumulative probability reaches the target
The Poisson model assumes replacements are independent and the installed population is large relative to the demand in a lead time, which holds for a wear-out part fitted in quantity and fails for a part with only two or three installed. It also assumes a constant failure rate over the lead time: a part with a strong wear-out characteristic has an age-dependent rate, and the preventive-maintenance interval tool is the right place to treat that. Lead time is taken as deterministic - lead-time variability raises the required stock above these figures, and on an imported part it is often the dominant uncertainty. The criticality bands are conventional and should be recalibrated to the plant before being used to rank a store.
Spare Parts Reorder Point, Safety Stock & Economic Service Level — free, with the formula and a worked example, at Textile School.