Evaluation of logistic service level of an automotive parts distribution firm

The stock management theories have a mathematical and statistical trend, usually failing in exposing the business side of decisions regarding inventory costs and the related service levels. The article tests the theory of defining the service level by building the profit mathematical model, using for such some available historical data. With this theory it is possible to find the optimal service level by deriving the profit curve and equaling the marginal profit to zero. The research is characterized as a case research of an auto parts distribution company. The calculated optimal service level was compared to the data available from the company. The results of such analysis revealed the fact that only the theory of calculating the optimal service level through the profit curve derivation is not sufficient to explain how the company defines which service level is going to be used.