What does the term 'independent demand' refer to in supply chain management?

The term 'independent demand' in supply chain management specifically refers to the demand for finished products that comes directly from customers. This demand is driven by the needs of the market rather than being influenced by the demand for other items in the supply chain. For example, if a retailer sells bicycles, the independent demand would be the number of bicycles customers want to purchase, which is not dependent on the number of bicycle parts or materials available.

This concept is crucial for inventory management, as it helps organizations plan their production and stock levels based on actual customer demand. Understanding independent demand allows businesses to better align their operations with market needs, ensuring they have sufficient finished goods available to meet customer expectations without being overly reliant on forecasts or other interdependencies in the supply chain.