Suppose you are pizza addict. You love to eat 1 pizza
daily. If you ordered pizza on 4 PM and you got delivery at 5
PM then difference 1 hour is called Lead Time.
Lead Time means delay between time of placing an order and time of receiving the ordered quantity.Suppose you came to know that pizza-hut would be closed for next 3 days. It means you cannot order pizza on those 3 days. Since you are pizza addict so you need 1 pizza daily. Now you ordered 3 extra pizza before those 3 days and kept in microwave. These 3 pizzas are your safety stock. Safety stock means minimum stock so production does not stop due to lack of raw material.
Lead Time means delay between time of placing an order and time of receiving the ordered quantity.Suppose you came to know that pizza-hut would be closed for next 3 days. It means you cannot order pizza on those 3 days. Since you are pizza addict so you need 1 pizza daily. Now you ordered 3 extra pizza before those 3 days and kept in microwave. These 3 pizzas are your safety stock. Safety stock means minimum stock so production does not stop due to lack of raw material.