Also called lead time demand, lead demand is the market demand for a particular product starting when a stock reorder is made and ends when the goods are delivered. To calculate lead demand, the daily sales numbers and total time it takes for the supplier to deliver the item from the date of order are considered. For instance, if a store sells 15 shirts a day and it takes 10 days for new lots of shirts to arrive from the date of reorder, the lead demand for the shirt would be sales per day multiplied by delivery time. In the above example, it should be 15 x 10 = 150 shirts.

Lead demand knowledge comes in handy when computing reorder point. By the way, lead demand is not the same for all products. When lead demand calculations are not right, a store may face stock-out scenarios if there is no safety stock (buffer stock) in place. And if there is safety stock, the safety stock units would get utilized, which usually should not be the case.