These days, customers are like people who suddenly fall ill in the middle of the night. They may not have seen a doctor in years, but now they need one. Right now, in the middle of the night. There is no time to wait.
A factory customers rush to order suddenly vital products and want them shipped ASAP. If the factory doesn't fill their needs, they will probably try a different factory next time.
Today, very few factory managers can still afford to tell such customers, "Look, these are all the models we make." or "We'll need at least three months before we can ship it." In a sense, customers have already embraced the Just-In-Time concept: "What I want, when I want it, and in just the amount I want."
Customers end up asking for products to be manufactured and shipped immediately, and factories can only reply, "Sorry, but it takes time to make those things." This creates a gap between customers and manufacturers. Manufacturers have come to regard inventory as something that fills this gap.
We call the period between the customer's placement of an order and the customer's receipt of the product the "customer lead-time." Even if we assume that the factory can begin manufacturing the ordered item right away, this customer lead-time must still include the time needed to make the order. This period is called the manufacturing lead-time. The customer lead-time also includes the time needed to deliver the product, which is called the "transportation lead-time." Let's stop there, omitting any consideration of time needed for clerical work in processing the order, and construct the simple formula:
Customer lead-time = manufacturing lead-time
+ transportation lead-time
Figure 2.24 shows two illustrations based on this formula.
However, this lead-time is not short enough to meet the customer's delivery deadline. So let us suppose that the