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Lead demand

Supply chain flashcard on Lead demand. Lead demand is the total demand between now and the anticipated lead time for delivery if a reorder is made now. How can we know lead demand if lead time varies?Synonym: lead time demand. Though the most relevant input for optimized inventory decision-making, it is rarely considered in a time series analysis. We already have forecasts per week and per month. Why do we also need this lead demand forecast? The image part of the flashcard features a store manager who among other things sells umbrellas. He is looking at a TV showing weather forecast with showers all week. He looks concerned and is thinking: if the lead time were shorter. The shelves with umbrellas are almost empty hinting that he will not be able to cover high demand during rainy weather period because lead times are longer and even if he places order now he is not going to get any more stock before the end of the rainy period. The bottom line says, a Lead Demand Forecast has an impact on inventory decisions; weekly and monthly forecasts do not.

Artist: Marina Besfamilnaya

Learn more in the entry Lead demand of the Lokad knowledgebase.