Lead Times: How to Model, Evaluate, Reduce, and Stabilize

This article discusses how inventory planners can cope with variable lead times. I will first illustrate the fundamental problem using dice. We will then highlight practices to evaluate, reduce, and stabilize lead times.

Nicolas Vandeput
7 min readApr 5, 2022


The current shortage of shipping containers is putting supply chains around the globe under pressure as lead times increase and become less reliable. Dealing with long chaotic lead times is a nightmare for inventory planners. And a showstopper for service levels.


Inventory Targets and Demand: Roll a Die

Imagine you are responsible for baking cakes in a bakery. Every morning you must decide how many delicious cakes you will bake.

On an average day, the demand for cakes is between 1 and 6 pieces — let’s assume it is equally likely that your clients will want 1, 2, 3, 4, 5, or 6 cakes. In this simple case, the daily demand for cakes behaves like rolling a dice.

Figure 2 Today, you only sold one cake—credit (https://pxhere.com/fr/photo/1600704).
Figure 3 Daily demand distribution

We can easily set inventory targets for such a predictable* demand pattern. For example, if you bake five cakes, you have an 83% chance to fulfill all demand (5/6 = 83 % as you satisfy all demand five days out of six).

*I am calling this predictable as we know the demand distribution probability. Demand could be highly variable — but still predictable.

Inventory Targets, Demand, and Lead Times: Roll a Die, and Then Some More

Let’s complexify our first example. You are now in charge of a supermarket with a similar daily demand for cakes (1 to 6 pieces per day). However, your supermarket doesn’t bake cakes. Instead, you order them from the close-by bakery. The baker will deliver you cakes, but she can’t promise a fixed lead time…



Nicolas Vandeput

Consultant, Trainer, Author. I reduce forecast error by 30% 📈 and inventory levels by 20% 📦. Contact me: linkedin.com/in/vandeputnicolas