What is independent Demand?

[Former Member]

hello everyone,

I have a doubt on basic difference between "Independent Demand" and "Dependent Demand".

I would appreciate if anyone can explain it to me.

Regards,

SG

[ferry_lianto · Accepted solution]

Hi Sanju,

The MRP system takes in a number of parameters as inputs and performs some level of analysis and generates recommendations that can either be accepted or rejected by the planner. One of the inputs of MRP is the bill of material, which is a list of all components (and in what quantity) needed to produce finished good(s). For example, the bill of material needed to produce a dinning set is 6 chairs and 1 table (supposedly). The demand for the dinning set here is independent while that for the chairs and table are independent.

An independent demand is a demand that is not based on the demand for another item while a dependent demand is based on the demand for another item. Hence, it can be concluded that the demand for the 6 chairs and the table is based on the demand for the table. Thus, you can forecast an independent demand while dependent demands are calculated based on the independent demand item. The role of the MRP therefore is to perform this calculation.

Regards,

Ferry Lianto

[Former Member]

Hello Ferry,

Thanks for the explaination.

As you said, we have to do forecasting on the Independent Demand, while Dependent demand get the requirement from BOM, then what is the requirement known as when it comes from VMI?

Whenever Demand Planning does the forecasting, it passes on to SNP as Independent Demand. So do we call the demand which is coming from VMI as Independent requirement?

Thanks again,

SG