How does lead time variability affect inventory planning?

• A. Variation in lead times decreases planning complexity.
• B. Variation in lead times reduces the need for forecasting.
• C. Variation in lead times has no impact on inventory decisions.
• D. Variation in lead times increases safety stock needs and planning uncertainty.

Answer: (D)

Lead time variability introduces uncertainty in replenishment timing. When the time between placing an order and receiving it can vary, you can’t rely on a single arrival date. To protect service levels, you must hold more buffer stock—safety stock—to cover the range of possible delays, and you adjust reorder points to account for this bigger spread in lead time. This extra buffer and the need to plan around uncertain arrival times create greater planning uncertainty overall.

Forecasting demand remains important, because you still need to know expected usage during the lead time, but variability in lead time changes how much you buffer rather than removing the need to forecast.

That’s why the answer stating that variation in lead times increases safety stock needs and planning uncertainty is the best fit.