Independent demand definition
/What is Independent Demand?
Independent demand is the demand for a finished product, which is being ordered by an outside party. It is difficult to predict independent demand, since it is subject to the vagaries of customer needs, which in turn may be influenced by such factors as general economic conditions, changes in fashion, and even the weather. Thus, the predicted arrival of thunderstorms may trigger a spike in the demand for umbrellas, while a decline in economic conditions might drive people to buy low-cost ramen noodles in higher volume.
Independent Demand vs. Dependent Demand
Independent demand is the demand for a finished good, such as a car, while dependent demand is the demand for a component part of a finished good, such as the tires on a car. Dependent demand is derived from the demand for a finished good. Thus, if the independent demand for a car is 100 vehicles, then the associated dependent demand is 400 tires (assuming four tires per car). Dependent demand can be derived from the bill of materials for a finished good. A bill of materials contains an itemization of the components that go into a finished product.