Lead Time Demand
Demand expected during lead time.
These tools are provided for educational and operational guidance only. Results are estimates and may not reflect all factors in your business. Always review calculations and use your own professional judgement before making decisions.
What is this tool?
The Lead Time Demand calculator estimates how many units you expect to sell or consume while you are waiting for a new order to arrive. It is the building block for setting reorder points and safety stock levels.
Formula
This tool uses a straightforward formula:
Lead time demand = average daily demand × lead time (days)
- Average daily demand = expected sales or usage per day.
- Lead time (days) = number of days between placing the order and receiving stock.
Once you know lead time demand, you can add safety stock and define a reorder point that protects service levels.
Example
Assume your average daily demand is 100 units and supplier lead time is 7 days.
Lead time demand = 100 × 7 = 700 units.
This means that, on average, you will sell or consume about 700 units while waiting for the next delivery. If you keep at least this amount on hand when you order, you should cover typical demand during lead time.
When should you use this tool?
- When designing basic inventory policies for items with reasonably stable demand.
- When you want to base reorder rules on actual demand and lead-time numbers.
- When you are explaining to colleagues why reorder points differ between items.
- When you are preparing to layer safety stock on top of lead time demand.
How this tool helps your business
- Reduces guesswork in inventory policies by grounding them in demand and lead time.
- Helps avoid both stockouts and overstock by clarifying what “normal” demand looks like.
- Improves communication with suppliers by making lead-time assumptions explicit.
- Supports standardization of reorder rules across warehouses and product lines.
Related tools
- Reorder Point Calculator – combine lead time demand with safety stock to set a reorder trigger.
- Safety Stock Calculator – convert volatility and service-level targets into extra buffer on top of lead time demand.
- EOQ Calculator – decide how much to order when your lead-time demand threshold is reached.
Frequently Asked Questions
How many periods of history should I use for daily demand?
Use enough history to capture typical variation—often the last few months. For strongly seasonal items, use comparable periods from previous seasons rather than mixing peaks and lows.
What if lead time varies between orders?
Use the most common or contractual lead time here and reflect extra variability in your safety stock rather than in the lead time demand itself.
Does this calculator account for promotions or one-off spikes?
No, it assumes representative average demand. You should adjust inputs manually when planning around known campaigns or unusual events.
How often should I update lead time demand?
Review it whenever demand trends or lead times shift materially—for example after adding new channels, changing suppliers, or observing sustained growth or decline.