Forecasting System Outputs:
In a company, inventory level is reviewed biweekly. If the parts used in an assembly have the lead time of one and a half week, what period should a forecast of requirements of parts cover for replenishment?
Solution
Forecast period = lead time + review period
= 1.5 weeks + 2 weeks
= 3.5 weeks
However, the replenishment of parts needs a forecast of requirements at least 3.5 weeks into the future.