Which metric measures the proportion of customer demand fulfilled from on-hand inventory?

• A. Service level
• B. Fill rate
• C. Cycle stock level
• D. Lead time

Answer: (B)

The main idea is to quantify how much of what customers want can be satisfied directly from the stock you already have. This is captured by fill rate, which measures the share of demand that is fulfilled from on-hand inventory. It’s usually expressed as a percentage: fill rate = units shipped from stock / total units demanded in the period. For example, if 100 units are demanded and you can ship 92 from inventory immediately, the fill rate is 92%.

This metric is the best fit because it directly reflects inventory availability and responsiveness—the extent to which you can meet customer demand without waiting for replenishment or backorders. In contrast, service level is about the probability of avoiding a stockout during lead time, which is a probabilistic measure rather than a direct portion of demand satisfied from stock. Lead time is the duration to deliver, not the proportion of demand fulfilled from on-hand stock, and cycle stock level is a quantity concept describing how much stock is kept to cover demand, not a fulfillment rate.