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The order and volume fill rates in inventory control systems

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  • Larsen, C.
  • Thorstenson, A.

Abstract

This paper differentiates between an order (line) fill rate and a volume fill rate and specifies their performance for different inventory control systems. When the focus is on filling complete customer orders rather than total demanded quantity the order fill rate would be the preferred service level measure. The main result shows how the order and volume fill rates are related in magnitude. Earlier results derived for a single-item, single-stage, continuous review inventory system with backordering and constant lead times controlled by a base-stock policy are extended in different directions. Demand is initially assumed to be generated by a compound renewal process. An important generalization then concerns the class of customer order-size distributions, i.e. compounding distributions, with increasing failure rate for which the volume fill rate always exceeds the order fill rate. Other extensions consider more general inventory control review policies with backordering, as well as some relations between service measures. A particularly important result in the paper concerns an alternative service measure, the customer order fill rate, and shows how this measure always exceeds the other two more well-known service measures, viz. the order fill rate and the volume fill rate.

Suggested Citation

  • Larsen, C. & Thorstenson, A., 2014. "The order and volume fill rates in inventory control systems," International Journal of Production Economics, Elsevier, vol. 147(PA), pages 13-19.
    • Handle: RePEc:eee:proeco:v:147:y:2014:i:pa:p:13-19
    DOI: 10.1016/j.ijpe.2012.07.021
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    References listed on IDEAS

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    Cited by:

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    2. Michael Dreyfuss & Alan Stulman, 2018. "Waiting time distribution for an exchangeable item repair system with up to two failed components," Annals of Operations Research, Springer, vol. 261(1), pages 167-184, February.
    3. Chong, You Quan & Wang, Bin & Yue Tan, Gladys Li & Cheong, Siew Ann, 2014. "Diversified firms on dynamical supply chain cope with financial crisis better," International Journal of Production Economics, Elsevier, vol. 150(C), pages 239-245.
    4. Disney, Stephen M. & Gaalman, Gerard J.C. & Hedenstierna, Carl Philip T. & Hosoda, Takamichi, 2015. "Fill rate in a periodic review order-up-to policy under auto-correlated normally distributed, possibly negative, demand," International Journal of Production Economics, Elsevier, vol. 170(PB), pages 501-512.
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    6. Lamghari-Idrissi, Douniel & Basten, Rob & van Houtum, Geert-Jan, 2020. "Spare parts inventory control under a fixed-term contract with a long-down constraint," International Journal of Production Economics, Elsevier, vol. 219(C), pages 123-137.
    7. Teunter, R.H. & Syntetos, A.A. & Babai, M.Z., 2017. "Stock keeping unit fill rate specification," European Journal of Operational Research, Elsevier, vol. 259(3), pages 917-925.
    8. Prak, Dennis & Rogetzer, Patricia, 2022. "Timing intermittent demand with time-varying order-up-to levels," European Journal of Operational Research, Elsevier, vol. 303(3), pages 1126-1136.
    9. Abbasi, B. & Hosseinifard, Z. & Alamri, O. & Thomas, D. & Minas, J.P., 2018. "Finite time horizon fill rate analysis for multiple customer cases," Omega, Elsevier, vol. 76(C), pages 1-17.
    10. Christian Larsen, 2017. "Inventory control with and without deliveries in several pieces," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 39(2), pages 607-622, March.

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