Explain Lead Time.
Lead Time: Lead Time is the time that takes the stock to reach from Re-order point to minimum stock level. This may be also defined as the time as elapses among the voicing of a requirement for anything and the time taken to satisfy the requirement. If one order is placed today and after 40 days this is fulfilled, then 40 days duration is the lead time.
Therefore it shows that order must be placed 40 days earlier. Lead time finds out the amount of material to be reserved in reserve. As the lead time reduces, the reserve stock also reduces and vice-versa.
Hence, the lead time analysis is very essential and the attempt should be made to reduce this period.