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Explain about the term Lead Time.
Lead Time:
It is the time which takes the stock to reach through Re-order point to minimum stock level. This may be also described as the time which elapses between the voicing of a requirement for anything and the time taken to satisfy the requirement. When one order is placed today and after 40 days this is fulfilled, in that case 40 days period is the lead time. Therefore, it demonstrates that order must be placed 40 days previous. Lead time finds out the amount of material to be maintained in reserve. When the lead time reduces, the reserve stock also reduces and vice-versa. Hence, the lead time analysis is very essential and the attempt must be made to decrease this period.
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VK Ltd a multi product company, furnishes you the following data relating to the year 2000. First half sales Second half sales Sales Rs.45000 Rs.50000 Total cost Rs.40000 Rs.4
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