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This is good for injection molders because it reduces their delivery lead time and cost per part.
Because units typically are sold during the delivery lead time, the actual inventory in stock rarely reaches eight units.
Delivery Lead Time - Time from production finished to customer order delivered.
The increasing emphasis on rapid replenishment raises a related question: can offshore manufacturers meet retailers' requirements for such short delivery lead times and so many services?
Store buyers succeeded by striking deals with apparel manufacturers for large shipments of white shirts at the lowest possible price and with long delivery lead times.
The trend towards thin wall molding continues to increase in many plastic industries as plastic material and energy costs continue to rise and delivery lead times are squeezed.
Note that there is a short delivery lead time from the time the order is placed: one day during the first two cycles shown in the figure, two days for the third cycle.
One reason American turned to McDonnell Douglas, Mr. Crandall said, was that Boeing has so many large orders that its delivery lead times have extended to three and four years.
When he picks it up, begins counting of Delivery Lead Time that ends when the dish is served to the customer, who can now happily say that the Order Lead Time was shorter than he had expected.
Another possible classification is one based on Lead Time (manufacturing lead time vs delivery lead time): Engineer to Order, Purchase to Order, Make to Order, Assemble to Order and Make to Stock.
"However," said Maury N. Harris, chief economist at Paine Webber, "the vendor performance index of delivery lead times," which, he said, is one of Mr. Greenspan's favorite indicators, "jumped from 47.6 to 56 in the Chicago purchasing agents' survey."
After investing heavily in computerization and better customer service, Posco has over the last two years cut average inventories of finished steel by two-thirds, to 360,000 tons; has cut in half delivery lead time to 14 days; and has sharpened on-time deliveries to 97 percent.
Maury Harris, chief economist at Paine Webber Inc., discussing the purchasing managers' report, noted that while the overall index of industrial sector business conditions slipped, there was a decline in the vendor delivery lead times - a favorite of Mr. Greenspan - and a modest rise in the prices paid component.