What is fill rate in inventory management?

• A. The proportion of customer demand that is met from stock on hand without backorders
• B. The percentage of orders delivered on time
• C. The total inventory level at period end
• D. The ratio of gross margin to cost of goods sold

Answer: (B)

Fill rate measures how much of customer demand can be satisfied directly from stock on hand, without backorders. It reflects the immediate service level, such as if 100 units are demanded and 95 are in stock ready to ship, the fill rate is 95%. It can be calculated as the proportion of demand (or orders/lines) fulfilled from stock. This is different from on-time delivery, which looks at delivering orders by the promised date rather than whether stock was available at the moment of demand. The other options describe on-time delivery, total inventory at period end, or a financial metric, not fill rate.