It's a tough call. I had to replace the lead in Hedda Gabler two weeks before it opened. There were many reasons--he hadn't learned his lines, he hadn't learned his blocking, he refused to do what my A/D asked him when I wasn't able to attend a rehearsal, he cursed at the female lead while onstage in rehearsals.
Actually, I told him that if he didn't have his lines down by a specific rehearsal, and he didn't do them properly, he would be fired. I didn't even go into some of the other things. At that rehearsal, he got all the words right--but it was a speed read. I fired him right after it. I didn't like doing it, but I felt I had no choice.
On the other hand, we were about halfway through rehearsal for a different show when one of the major supporting actresses came to me and said that she knew she wasn't doing well, and offered to drop out of the show. What made it difficult for me is that my wife had auditioned for the part, and the casting committee had not chosen her for the role. But I felt that in community theatre, you do the best with the people who are cast unless you get put into an untenable position. I told the woman who offered to drop out that I did not want her to leave the show. Even though I felt my wife could have done it better, I felt an obligation to the woman who was originally cast.

Our theatre groups gets at least twice the number of people at auditions than we need.  This allows us to cast extras in crowd scenes or put some people on a "waiting list".  This is so we can be strict about lateness and missed rehearsals and able to replace people.  If some one is late or misses a rehearsal, we give them a verbal warning.  The second offense is either they are given a smaller part or removed from the production.  All this is explained in our guidlines that everyone signs.  Parents sign for minor actors.  We are fairly strict about this.  If an actor misses a rehearsal or is late, but they have called to let us know, we usually accept this.  Because of this practice, we seldom have people who are late or miss rehearsals without notice.  We could not do this if we had a lot smaller turn out at audtions.