Weeks of Supply vs. Fill Rate: A Pragmatic Guide

At Singuli, we are frequently asked why we prefer Fill Rate over Weeks of Supply (WOS) when assessing inventory health. While both metrics aim to predict stockouts, WOS often provides a distorted picture of reality. Here is why Fill Rate is the superior metric for inventory management.

Defining the Metrics

• Weeks of Supply (WOS): Estimates how long current inventory will last based on sales velocity. It asks: “If I sell X units per week, how many weeks until I hit zero?”
• Fill Rate: Measures the percentage of total demand you can fulfill over a specific window (e.g., the next 2 weeks). It asks: “What proportion of my upcoming customers will actually get their product?”

$$\text{Fill Rate} = \frac{\min({\text{inventory holding amount},\text{upcoming demand})}}{\text{upcoming demand}}$$

The Pitfalls of Weeks of Supply

1. The Aggregation Problem

WOS becomes misleading as soon as you look at more than one SKU. When you average the WOS of multiple products, merging “popular items” (which stock out first) and “slow-movers” is not well defined and the result can either hide or exaggerate the risk of lost sales.

Example: Two T-Shirt Sizes

• Size S: 10 units in stock | Demand: 10/week | WOS: 1.0
• Size M: 50 units in stock | Demand: 20/week | WOS: 2.5

If you aggregate these, you might claim a “Total WOS” of 2.0 (10+50 / 30). This suggests you are safe for two weeks. In reality, your Small size will stock out in seven days, leading to lost sales. An average of 1.75 WOS would not have been more accurate. You can make the example more extreme by assuming 1 unit of Size S in stock and a demand of 1/week.

The Fill Rate Advantage: In the same scenario, the 2-Week Fill Rate for the Small is 50% and the Medium is 100%. Weighted by demand, your total Fill Rate is 83%. This number accurately reflects that you will miss 17% of your total sales—a much more “truthful” indicator of health.

2. The “Incoming Stock” Dilemma

WOS struggles to handle upcoming receipts (from POs, transfers, etc).

Imagine a product with 10 units in stock and a demand of 20/week, but a shipment of 100 units arrives in seven days.

• Current WOS: 0.5 (Looks like a crisis)
• WOS including PO: 5.5 (Looks perfectly healthy)

Both numbers are wrong. The first ignores the incoming stock; the second hides the fact that you will be out of stock for several days before the shipment arrives.

The Fill Rate Advantage: A 2-Week Fill Rate accounts for the gap. It sees you will miss 10 sales before the PO arrives, resulting in a 75% Fill Rate. It accurately captures the impact of the stockout without ignoring the incoming supply.

Moving Forward

While Fill Rate isn’t perfect—it doesn’t tell you exactly when a stockout occurs within the window—it provides a far more accurate snapshot of your inventory’s ability to generate revenue.

How to transition:

1. Dual Reporting: Start displaying Fill Rate alongside WOS to help your team get used to the percentage-based logic.
2. Focus on the Goal: Use Fill Rate to identify lost revenue and WOS as a secondary “countdown” timer for individual SKUs.
3. Remember Overstock: Neither metric effectively identifies overstock. To balance your inventory perfectly, you need a composite approach that weights both stockout risk and excess capital.