The Significance of Inventory Lead Time for Manufactured items in Microsoft Dynamics AX & 365 for Finance and Operations, Enterprise

The inventory lead time for a manufactured item can serve one or more purposes for modeling supply chain activities.  It typically represents the fixed lead time for the item's production orders, but the significance of this fixed lead time depends on whether routing data has been defined for the item. Other purposes of this fixed lead time are related to the item's safety stock requirements, if applicable.  However, these variations in the significance of the Inventory Lead Time are often the source of some confusion.

This article describes the significance of the Inventory Lead Time in various scenarios and provides several illustrative case studies.  The explanation applies to the current version of Microsoft Dynamics 365 Finance and Operations, Enterprise edition (termed D365FOE for short) and to previous versions of Dynamics AX because the functionality has not changed across the different versions.[1]  To illustrate this point, the screenshots within the article reflect the user interface in Dynamics AX 2009 as well the D365FOE user interface.     

The article consists of the following sections.

1. Summarizing the Significance of Inventory Lead Time
2. Fixed Lead Time for a Production Order
3. Due Date of a Safety Stock Requirement
4. Calculate a Safety Stock Quantity
5. Example of Defining the Inventory Lead Time for an Item

To simplify the explanation and screenshot examples, it is assumed the item identifier consists of just the item number, and coverage planning applies to the site/warehouse.  This represents a dominant business model for many AX/D365FOE implementations.  However, the same concepts apply when the item identifier and coverage planning include other dimensions such as color, ...