What does the fill rate represent in inventory management?

The fill rate is a critical metric in inventory management that specifically measures the percentage of customer demand that is satisfied through existing inventory without backorders. When a company maintains a high fill rate, it demonstrates efficiency in stocking and meeting customer needs promptly. This is essential for maintaining customer satisfaction and loyalty, as it reflects the ability of a company to deliver products on time.

In contrast to the other options, the fill rate is not about the total number of items in stock or the total inventory value; it focuses on the relationship between inventory availability and customer demand. Additionally, while the number of items ordered by customers is related to sales activity, it does not directly indicate how well those demands are met by the current stock, which is precisely what the fill rate captures. Therefore, the choice that specifies the percentage of demand fulfilled from on-hand inventory accurately reflects the purpose and measurement of the fill rate in inventory management.