What is a fill rate?

A fill rate is a critical metric in inventory management and supply chain operations, representing the effectiveness and efficiency of fulfilling customer demand. Specifically, it measures the percentage of customer orders that can be met with the current inventory available for sale.

When calculating the fill rate, the focus is on understanding how well inventory levels align with demand. A higher fill rate indicates that a larger portion of orders is fulfilled from stock, which typically leads to better customer satisfaction and reduced backorders.

The other options refer to different aspects of inventory management. The total volume of stock on hand reflects inventory levels but does not provide insight into how well these levels meet demand. The amount of safety stock held pertains to the buffer inventory maintained to mitigate stockouts but doesn’t directly assess order fulfillment. Lastly, the cost associated with inventory storage relates to the expenses of maintaining stock but is not a measure of how effectively inventory meets customer needs. Thus, the focus of the fill rate as the percentage of demand met by available stock clearly defines why this option is the most accurate.