Lead Time in Production Planning
In production planning, lead time is very important. Suppose, A product is made from material B and material C. Material B is made from material C. It means, if there will delay in the material C, there will be the delay in material B. So, there will be delay in the production of product A. Customer will not get delivery on the time. So, we fix the deadline for getting supply and production. Suppose, we have fixed the 30 days of delivery after customer places the purchase order. It means, we have to fix the date of buying and production of material B and C which we can easily calculate with lead time chart.
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