Calculators
Supplier Lead Time Cost Calculator
Calculate the inventory and carrying cost of a supplier's lead time and compare a cheaper slower supplier with a faster one.
- Runs in your browser
- Nothing uploaded
The tool
Enter your numbers below. Results update as you type, and nothing leaves your browser.
Everything you enter stays on your own machine. Nothing is sent to us or to anyone else, which you can confirm in your browser network tab.
What people use it for
- Comparing offshore and nearshore suppliers
- Supplier negotiations
- Inventory policy decisions
- Procurement business cases
About this tool
What the Supplier Lead Time Cost Calculator does
A longer lead time means holding more stock in the pipeline and more safety stock, both of which tie up cash and cost money to carry. A supplier with a lower unit price but longer, less reliable lead times can end up more expensive overall.
Formula
- Pipeline stock = daily demand × lead time × price
- Safety stock (lead-time variability) = Z × daily demand × lead-time std dev × price
- Total = purchases + (pipeline + safety) × carrying cost %
Worked example
Using the starting values in the calculator above:
| Input | Value |
|---|---|
| Annual units | 50,000 |
| Supplier A unit price | $10.00 |
| Supplier A lead time | 60 days |
| Supplier A lead time variability (std dev) | 12 days |
| Supplier B unit price | $10.60 |
| Supplier B lead time | 14 days |
| Supplier B lead time variability (std dev) | 2 days |
| Annual carrying cost | 22% |
| Service level factor (Z) | 1.65 |
| Result | Value |
|---|---|
| Lower total cost | Supplier A |
| Annual difference | $11,477 |
| Supplier A total annual cost | $524,049 |
| Supplier B total annual cost | $535,527 |
| Inventory tied up with A | $109,315 |
| Inventory tied up with B | $25,121 |
How to read the result
Freight, duties and the risk of disruption also differ between distant and nearby suppliers; add them where relevant.
A more reliable supplier reduces safety stock even if average lead times are similar.
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Questions
Questions about this tool
The things clients actually want to know — costs, timelines, ownership and what happens after launch.
Longer lead times increase pipeline and safety stock, which raises carrying costs.
Stock that is ordered and paid for but still in transit or production.
Not when longer, less reliable lead times add more inventory cost than the price saves.
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