Question { 4991 }

what is lead time in supply chain management

Answer

Lead time in SCM refers to the amount of time elasped between the order and delivery of a product.For a manufacturing company,the difference between the time when it orders any raw material or subassemblies from a supplier for manufacturing its products and the time when it actually receives these supplies would constitute the lead time.Lead times are usually of order of weeks or months in manufacturing,that's why manufacturing firms have to plan for production schedule keeping in view the lead times for raw materials or subassemblies or constituent parts(automotive parts)as not accounting for lead times can have an adverse effect on the ability of a firm to deliver their manufactured products on time to their customers.

Question { TCS, 11390 }

what is the difference between IRR and interst rate

Answer

Internal rate of return(IRR) is the discounted rate at which the present(future values discounted at certain rate r) value of all cash outflows(over life of a project)becomes equal to the present value of all cash inflows.
Present value of a cash flow=Amount projected/(1+ r)^t
where r=IRR,t=number of years from project start.
Interest rate is cost of capital i.e.rate at which capital(debt)becomes available from market like 10% or 15%.
For a project worth starting,IRR should be greater than the interest rate at which capital investment into the project is done.