A Company Recently Lowered Its Service Performance from 99 Percent

Multiple Choice

A company recently lowered its service performance from 99 percent product availability to 97 percent product availability.The change saved the company exactly $1 million per year in inventory carrying cost.Senior management now wants to lower the service level to 95 percent from 97 percent.Such a further change is likely to save:

A) Less than $1 million.
B) Exactly $1 million.
C) More than $1 million.