Lead time consists of which components?

• A. Lead time comprises only supplier lead time.
• B. Lead time includes only manufacturing lead time.
• C. Lead time includes supplier lead time, manufacturing lead time, and transit time.
• D. Lead time is the time it takes to receive the order after it is placed, excluding production.

Answer: (C)

Lead time is the total time from when you place an order to when you receive the finished product. It consists of three main parts: supplier lead time, manufacturing lead time, and transit time. Supplier lead time covers the period from placing the purchase order to the supplier delivering the raw materials. Manufacturing lead time covers everything that happens inside your own operation to turn those materials into a finished item, including setup, processing, queuing, and any inspections. Transit time is the time materials and then finished goods spend moving between locations, such as from supplier to the plant and from the plant to the customer. All three components add up to the total lead time, so focusing on just one piece would miss part of what determines how quickly you can fulfill an order.