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Is lead time in inventory really important. how can mismanaging lead time cost company's money?
Wiki User
∙ 12y ago
The lead time is the duration between placing an order until receiving the order. This term is used in the production planning. Let's suppose you just noticed that the number of units of product X in the warehouse is not enough and your customer L is in the showroom waiting for his order of product X. Then, you will call the supplier to order the number of units you want. There are two scenarios in this case; the supplier will tell you OK your order will be in your warehouse within a couple of hours. However, the supplier can be in another town or even in Another Country. Then your order will take days or weeks. Moreover, the supplier may say I am sorry I don't have this number of product X. This scenario shows the importance of the lead time in production planning. So, when there is a lead time we should put in mind this duration in order to satisfy the demand.
Wiki User
∙ 12y ago
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