Question 1

Why can service level be high while fill rate is low?

Accepted Answer

Service level measures the probability of ANY stockout during a cycle, while fill rate measures the PROPORTION of demand met. A single stockout event (lowering service level) might only affect 2% of unit demand (high fill rate). Conversely, a warehouse with 95% service level across 100 SKUs may have disappointing order fill rate if multi-SKU orders frequently have at least one item out of stock.

Question 2

What is a good fill rate target for e-commerce?

Accepted Answer

Top e-commerce companies target 97-99% line fill rate. Amazon aims for 99.5%+ on Prime items. For most businesses, 95% order fill rate is the minimum acceptable level. Improving from 95% to 99% typically requires 40-60% more safety stock investment, so the cost-benefit analysis is critical.