This page explains how lead time and minimum order quantity can shift the right sourcing choice on their own, for a domestic brand's buyer or owner choosing where to place a replenishment order. This lesson mainly teaches a decision: when landed cost is close, or even favours a farther origin, lead time and minimum order quantity can still rule that origin out. Omar, the owner of Cedar & Co., meets this decision whenever his own shops need a fast T-shirt replenishment and a farther, cheaper-looking factory is offered.
A person who checks landed cost and stops there can still choose the wrong sourcing origin, because a cheaper landed cost is worthless if the goods arrive after the shop has already run out, or if the factory will only accept a quantity far larger than the shop actually needs. Lead time decides whether the goods arrive in time; minimum order quantity decides whether the order can even be placed at the size the shop needs. Without checking both against the shop's own replenishment need, a lower landed cost can lead to an origin that cannot actually deliver what the business needs.
You need: lesson 5.2 is useful background, since it explains landed cost, but it is not required.
By the end of this lesson you can:
Not covered here: calculating landed cost itself (lesson 5.2); splitting one order across two origins to get both a good price and a fast lead time (lesson 5.4); putting all factors together for a new order (lesson 5.5).
| Term | Meaning |
|---|---|
| Lead time | The total time from a confirmed order to the goods reaching their destination. |
| Minimum order quantity | The smallest amount a mill or factory will accept or process as one order. |
| Buffer stock | A small stock of fast-moving components a mainly Make to Order factory keeps on hand to shorten lead time on repeat orders. |
| FOB price | The price the factory charges for the garment, delivered on board the ship at its own port. |
| Landed cost | The FOB price plus shipping and duty once goods reach the buyer's own country, USD 3.70 per piece on Order A. |
Lead time and minimum order quantity are not secondary checks after landed cost; either one can rule out an origin regardless of its price. A replenishment order that must reach a shop before stock runs out needs a lead time short enough to make that date, and no landed-cost saving changes a lead time that arrives too late. Likewise, an order sized to what a shop actually needs cannot be placed at all with a factory whose minimum order quantity sits above that size, whatever its price. These two factors act as gates: an origin that fails either one is not a workable choice for that order, no matter how its landed cost compares.
| What can differ | The shapes you meet | Why it matters |
|---|---|---|
| Domestic, Make to Stock | Cedar & Co.'s domestic replenishment from Delta Garments has a short, predictable lead time and no minimum order quantity problem, since Delta Garments already knows Cedar & Co.'s own repeat sizes. | A Make to Stock replenishment order depends on a fast, reliable lead time to avoid a shop running out; a domestic, familiar origin usually protects this best. |
| Export, Make to Order, far origin | Factory Y's illustrative quotation for the same specification carries a 22-week lead time and a 20,000-piece minimum order quantity, both unsuited to a shop replenishment that needs stock in weeks, not months, at a smaller quantity. | A farther origin's longer lead time and larger minimum order quantity can rule it out for a fast, smaller replenishment order, regardless of its price. |
| Export, Make to Order, first bulk order | The same Factory Y quotation can suit Northline Apparel's own first bulk Make to Order run, where a 22-week lead time is already built into the buyer's own planning calendar and 20,000 pieces matches the order size anyway. | The same lead time and minimum order quantity that rule out an origin for one order type can fit another order type placed further in advance and at a larger size. |
| Other product families | A denim order such as Order B's jeans adds its own washing lead time at Cairo Wash Works, so a replenishment shape for denim needs an even shorter margin between confirmed order and shop date than a T-shirt replenishment does. | The lead-time gate applies to any product family, but the total lead time it must fit inside differs by what stages the product itself needs. |
Omar, the owner of Cedar & Co., is offered Factory Y's illustrative quotation for the brand's next T-shirt replenishment, at a delivered cost close to what Delta Garments already charges domestically. Cedar & Co.'s own shops need the replenishment in 6 weeks, and the quantity needed is 4,000 pieces. Factory Y's own lead time is 22 weeks and its minimum order quantity is 20,000 pieces; Delta Garments' domestic route delivers in 5 weeks and accepts any quantity Cedar & Co. actually needs. Omar enters both origins into the Sourcing Origin Decision Guide's Compare sheet before deciding.
The worked numberThis lesson's worked number is a pass-or-fail check against the shop's own requirement, not a cost calculation.
A common mistake is comparing landed cost first, forming a preference for the cheaper-looking origin, and only checking lead time and minimum order quantity afterwards as a formality. As the worked number shows, Factory Y fails both gates for Cedar & Co.'s replenishment need, making its landed cost irrelevant however it compares.
This trap costs real time and, on a Make to Stock order, real lost sales, not a one-time mistake. If Omar had committed to Factory Y before checking its lead time, Cedar & Co.'s shops would run out of stock for roughly 16 weeks past the 6-week need-by date, weeks of lost sales at Cedar & Co.'s own shop margin that no landed-cost saving could recover.
Even if a factory in another place offers about the same final cost, it may still not be the right choice, for two simple reasons. First, if the shop needs the goods in a few weeks and that factory takes many months, the goods will not arrive in time no matter how good the price is. Second, if the shop only needs a few thousand pieces and the factory will only accept an order many times larger, the order simply cannot be placed there. Both of these should be checked before the price is even compared, because a good price from a factory that cannot deliver in time or cannot accept the right quantity is not actually a choice at all.
Omar, the owner of Cedar & Co., is deciding on the brand's next T-shirt replenishment order. The facts in front of him:
The document Omar reads, the Sourcing Origin Decision Guide's own Compare sheet output for this case:
Should Omar consider Factory Y further because its price looks close to Delta Garments', or rule it out on lead time and minimum order quantity alone? Decide before you open the answer.
He should rule out Factory Y on lead time and minimum order quantity alone, without needing to compare price any further.
Two facts decide this. First, Factory Y's 22-week lead time is 16 weeks past Cedar & Co.'s 6-week need-by date, meaning the goods would arrive long after the shops had already run out. Second, Factory Y's 20,000-piece minimum order quantity is 16,000 pieces above the 4,000 pieces Cedar & Co. actually needs, meaning the order could not even be placed at the right size.
Choosing Factory Y despite these two failures would leave Cedar & Co.'s shops without stock for about 16 weeks, and would force ordering five times the stock actually needed, tying up cash in unsold pieces regardless of the delivered cost.
This lesson's cost is what choosing Factory Y despite its gate failures would cost Cedar & Co. A 16-week stock-out at even a modest weekly sales rate of 200 pieces across Cedar & Co.'s 12 shops (2,400 pieces of lost sales potential per week) points to lost sales far larger than any landed-cost saving Factory Y might have offered, since Cedar & Co.'s own T-shirt shop margin already runs into thousands of dollars a week across its shops. Beyond the stock-out, ordering the 20,000-piece minimum instead of the 4,000 pieces needed would tie up cash in 16,000 excess pieces, a cost with no offsetting benefit once the two gates have already failed.
Copy this row into the Sourcing Origin Decision Guide's Compare sheet, using the need-by date and quantity for the order you are deciding.
| Check point | Spec says | Found (your entry) | Result |
|---|---|---|---|
| Lead time and minimum order quantity gate check | Enter the order's need-by date and quantity and each origin's stated lead time and minimum order quantity; record any gate failure before comparing cost |
Download the full working sheet, with Cedar & Co.'s gate check already filled in, from the link on this course's page.
1. Why can lead time and minimum order quantity rule out a sourcing origin regardless of its landed cost?
2. Factory Y's lead time is 22 weeks; Cedar & Co.'s replenishment is needed in 6 weeks. What does this alone say about Factory Y?
3. A shop needs 6,000 pieces in 10 weeks. An origin offers an 8-week lead time and a 5,000-piece minimum. Does it pass both gates?
| EN | AR | FR | TR | Meaning |
|---|---|---|---|---|
| Lead time | الوقت الإجمالي للتنفيذ | Délai de production | Teslim süresi | The total time from a confirmed order to the goods reaching their destination. |
| Minimum order quantity | الحد الأدنى لكمية الطلب | Quantité minimale de commande | Minimum sipariş miktarı | The smallest amount a mill or factory will accept or process as one order. |
| Buffer stock | مخزون احتياطي (وسيط) | Stock tampon | Tampon stok | A small stock of fast-moving components a mainly Make to Order factory keeps on hand to shorten lead time on repeat orders. |
| FOB price | سعر التسليم على ظهر السفينة | Prix FOB | FOB fiyatı | The price the factory charges for the garment, delivered on board the ship at its own port. |
| Landed cost | التكلفة بعد الوصول | Coût rendu | Teslim maliyeti | The FOB price plus shipping and duty once goods reach the buyer's own country, USD 3.70 per piece on Order A. |
You now know how lead time and minimum order quantity can shift the right sourcing choice on their own. The next lesson looks at what happens when neither origin alone is the full answer, and an order is split between two sourcing origins instead. Back to the course map