In inventory management, what does the fill rate measure?

In inventory management, what does the fill rate measure?

• A. The percentage of demand satisfied directly from on-hand stock without backorder.
• B. The speed of delivery.
• C. The average time to replenish stock.
• D. The ratio of on-hand stock to on-order stock.

Answer: (A)

Fill rate measures how much customer demand is satisfied directly from existing on-hand stock without backorders. It shows the immediate availability of inventory to meet orders and is a key service-level indicator in inventory planning. For example, if 100 units are demanded and 95 can be fulfilled from stock on hand, the fill rate is 95%. This metric focuses on stock readiness to satisfy demand now, not on how fast you deliver or how long replenishment will take. Those aspects relate to delivery speed and replenishment lead time, while the ratio of on-hand to on-order stock describes current stock status but not the portion of demand actually filled from stock.

Fill rate measures how much customer demand is satisfied directly from existing on-hand stock without backorders. It shows the immediate availability of inventory to meet orders and is a key service-level indicator in inventory planning. For example, if 100 units are demanded and 95 can be fulfilled from stock on hand, the fill rate is 95%. This metric focuses on stock readiness to satisfy demand now, not on how fast you deliver or how long replenishment will take. Those aspects relate to delivery speed and replenishment lead time, while the ratio of on-hand to on-order stock describes current stock status but not the portion of demand actually filled from stock.