Certified Materials and Resource Professional Practice

The Fill Rate Ratio is a key performance indicator used to measure the efficiency of an inventory or supply chain system, reflecting how well customer demand is met with the available supply. The calculation involves taking the total line items supplied to the customer and dividing it by the total line items requested. This formula effectively quantifies the percentage of customer orders that are fulfilled completely, indicating how well inventory levels align with customer demand.

Using this method provides valuable insights into inventory management, customer satisfaction, and the overall performance of the supply chain. A high fill rate ratio suggests that a business is capable of fulfilling most or all of its customer requests, which is essential for maintaining strong customer relationships and optimizing sales. In contrast, lower ratios might signal potential issues with stock levels, order processing, or demand forecasting.

The other options do not accurately define the Fill Rate Ratio as it pertains to inventory management. For instance, calculating the number of items returned over total items requested focuses on returns rather than fulfillment efficiency. Similarly, inventory on hand versus inventory sold does not address the fulfillment aspect directly related to customer orders. Lastly, subtracting line items requested from those supplied does not provide a clear metric for understanding fulfillment performance. Thus, the calculation of line items supplied to the customer divided by the