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Customer service level in a supply chain is a function of several
different performance indices. The first one is the
**order fill rate**,
which is the fraction of customer demands that are met from stock. For this
fraction of customer orders, there is no need to consider the supplier
lead times and the manufacturing lead times. The order fill rate could
be with respect to a central warehouse or a field warehouse or stock at
any level in the system. **Stockout rate** is the complement of fill rate and
represents the fraction of orders lost due to a stockout.
Another measure is the **backorder level**, which is the number of orders
waiting to be filled. To maximize customer service level, one needs
to maximize order fill rate, minimize stockout rate, and minimize
backorder levels. Another measure is the **probability of on-time delivery**, which
is the fraction of customer orders that are fulfilled on-time, i.e. within
the agreed-upon due date.

*Shantanu Biswas*

*2000-08-16*