Final answer:
To calculate the lead time demand for a product with a lead time of 21 days and an average daily demand of 100 units, you multiply the two, resulting in a lead time demand of 2100 units.
Step-by-step explanation:
The question relates to calculating the lead time demand for a product, which is essential for effective inventory management in a business context. Lead time demand is the total number of units of a product that will be sold during its lead time, or the time it takes to restock the product.
In this case, if the lead time for one of the fastest-moving products is 21 days and the average demand during this period is 100 units per day, to calculate the lead time demand, you would multiply the daily demand by the lead time:
Lead time demand = Daily demand × Lead time
Lead time demand = 100 units/day × 21 days
Lead time demand = 2100 units
Thus, the business needs to ensure there are at least 2100 units in stock at the beginning of the lead time to meet customer demand without running out of inventory. Remember, having an accurate forecast of lead time demand is crucial for maintaining optimal inventory levels and achieving customer satisfaction.