Fill rate is the percentage of total customer demand fulfilled immediately from on-hand inventory — the fraction of units requested that actually ship (or sell) without delay or backorder.
Quick answers
What is fill rate? Fill rate measures how much of what customers want, they actually get. If customers demand 1,000 units in a period and you fulfill 980 from stock, your fill rate is 98%. It is the most customer-visible measure of inventory performance.
What's the formula? fill rate = (units shipped from stock / total units demanded) × 100. Some operators calculate it by order lines (line fill rate) or by complete orders (order fill rate) rather than units.
How is fill rate different from service level? Service level (cycle service level) is the probability of NOT stocking out during a replenishment cycle. Fill rate is the proportion of demand actually satisfied. A 95% service level typically yields 99%+ fill rate, because stockouts only affect the tail end of demand in a given cycle — most units are still fulfilled.
What fill rate should I target? It depends on ABC classification. A-items: 99%+. B-items: 96–99%. C-items: 90–95%. Pushing every SKU to 99.5% is uneconomical — the Safety Stock required grows exponentially above 98%, and the incremental carrying cost rarely justifies the improvement.
Fill rate formula
fill rate (%) = (units demanded − units short) / units demanded × 100
or equivalently:
fill rate = 1 − (expected units short per cycle / average demand per cycle)