Independent demand refers to the call for an item on its own, without any relationship to other items. This contrasts with dependent demand, where requests for one product are dependent on another product. In inventory management, it can be important to determine if relationships exist between items in stock so they can be controlled appropriately. When levels of dependent items change, companies want to make sure their stock is adequately replenished to meet the need.
In an example of independent demand, a furniture company may sell products like couches, which are sold independently. People don’t need to buy anything else to use a couch, nor do they need to purchase a couch in order to use another item. By contrast, the company may also sell kitchen chairs, which are subject to dependent demand. They are usually purchased to go with a kitchen table, which is considered the parent item. The practice of selling both items together in most cases creates a relationship between the two.
Items in inventory subject to independent demand can be viewed on their own when making stocking decisions. Companies order sufficient amounts to meet customer needs and try to maintain numbers at a reasonable level. If items have a dependent relationship, inventory needs to be managed differently. Selling kitchen tables with no chairs to go with them won’t make a store popular with customers, nor is it helpful to stock chairs that don’t match any of the tables in stock.
Customer demand for specific products and services can change, and companies need to be prepared to adapt. Independent demand makes products highly subject to the whims of customers, because they aren’t sold as part of package deals. Conversely, dependent demand can be more closely controlled and thus can be easier to predict and plan for. Inventory management software can help administrators with planning and may include tools customized to different kinds of demand to yield the most reliable and dependable results.
Relationships between items in inventory can shift over time, and may also depend on the kinds of services a store offers. Furniture stores may be more likely to sell bedroom sets, for example, including mattresses, frames, and sheets. A mattress store, on the other hand, might sell more mattresses on their own, with a smaller market in frames. It experiences an independent demand for mattresses. Management at a store can review items in inventory and the store’s overall mission to determine whether relationships exist and how they should be managed.
Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.