Subtleties in lead time calculations

Published on by Joannes Vermorel.

The lead time is one of the two variables, along with the service level, that are essential to optimize inventory. Yet, calculating the correct lead time can be somewhat tricky because of start-of-day vs end-of-day variations, business days vs calendar days, reordering delays, etc 

 

Illustration of lead time calculation when reordering delays.

 

The illustration shows a store reordering every 3 days with a supplier lead time of 4 days. The applicable lead time in this case is 7 days.

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Categories: supply chain Tags: documentation insights