What are dependent demand items?

Dependent demand items refer to components whose demand is directly tied to the production of a finished product. These items are typically raw materials and subassemblies that are necessary for the manufacturing process. When a manufacturer determines how many finished goods to produce, this directly influences the quantity of raw materials and subassemblies needed. For example, if a company plans to produce 100 bicycles, it needs a specific number of frames, wheels, and other components. The demand for these components is dependent on the demand for the final product.

In contrast, finished goods sold to customers represent independent demand items because their demand is determined by customer purchasing behavior rather than the production of another item. Consumer goods held in retail inventory and items received from suppliers also do not represent dependent demand, as they do not derive their demand from the production of another product but rather from market demands and supplier agreements. Hence, the classification of raw materials and subassemblies as dependent demand items aligns with the principles of supply chain management, emphasizing the interconnection between production planning and material requirements.