Hydraulic Fracturing (“Frac”) Pumps - Lead Time Section
The data collection, qualification, and analysis process for lead times is similar to that for capacity utilization. Lead time data points undergo the same vetting process, and we use the same controls to ensure regional balance.
In addition to obtaining lead times from interviews and subject matter experts, we calculate lead time econometrically, using demand growth, capacity utilization, and backlog levels. We incorporate both methodologies into our forecasts to mitigate differences in individual buyer or supplier perspectives.
Lead time also influences backlog, prices, demand, and capacity investments. These effects are matched up with capacity margin and utilization in our model, and cross-checked for any discrepancies.