Delivering goods on time and producing goods with shorter lead times than the market dictates are important competitive tools. On-time delivery of goods is related to a firm’s ability to forecast the time required to produce and deliver goods. If a firm has higher inventories than its competitions, then the firm’s production lead time is higher than the industry’s forecast horizon. High inventories may obscure the actual time required to produce and fill an order. Lower inventories allow actual lead times to be more carefully observed, and more accurate delivery dates can be provided. Shortening lead times is also crucial; doing so is equivalent to lowering work-in-process inventories. A company carrying 10 days of work-in-process inventories has an average production lead time of 10 days. If the company can reduce lead time from 10 to five days, then the company should know be carrying only five days of work-in-process inventories.