In inventory management, what does the term "lead time" refer to?

In inventory management, "lead time" specifically refers to the time between placing an order and actually receiving the stock. This concept is critical for effective inventory control, as it helps businesses plan their stock levels, avoid shortages, and manage supply chain dynamics. Understanding lead time is essential for ensuring that products arrive when needed to maintain smooth operations and meet customer demands.

By accurately predicting lead times, a pharmacy can effectively manage its inventory levels, allowing for the optimization of stock without over-ordering or risking stockouts. This ensures that necessary medications and supplies are always available for patient care.