Which describes independent demand?

• A. Finished goods sold to customer
• B. Seasonal adjustments
• C. Derived demand for components
• D. Demand from internal planning

Answer: (D)

Independent demand is the demand for items that starts the planning process and is not caused by the demand for other items in the bill of materials. It typically comes from forecasts or orders for finished goods and, in planning terms, is driven by the master production schedule for those finished goods. Demand from internal planning fits this idea well because it represents the planned, initiating demand for finished goods within the company—the trigger that determines what needs to be produced or purchased, independent of the needs of components. Seasonal adjustments affect timing and volume but aren’t the source of the demand, and derived demand for components is by definition caused by the finished-goods demand. While finished goods sold to customers are also independent demand, the internal planning source best embodies the initiating, non-derived demand in a planning context.