Review and Discussion Questions
Distinguish between dependent and independent demand in a McDonald’s, in an
integrated manufacturer of personal copiers, and in a pharmaceutical supply house.
The key to the answer here is to consider what must be forecasted (independent demand), and,
given the forecast, what demands are thereby created for items to meet the forecasts
In a McDonald’s, independent demand is the demand for various items offered for sale—Big
Macs, fries, etc.
The demand for Egg McMuffins, for example, needs to be forecasted.
the forecast, then, the demand for the number of eggs, cheese, Canadian bacon, muffins, and
containers can then be computed based on the amount needed for each Egg McMuffin.
The manufacturer of copiers is integrated, i.e., the parts, components, etc. are produced
The demand for the number of copiers is independent (must be forecasted).
the forecast, the Bill of Materials is exploded to determine the amounts of raw materials,
components, parts, etc. that are needed (more on the BOM in chapter 16).
The pharmaceutical supply company is an extreme case where only end items are carried and
nothing is produced internally.
The bill of materials is the end item and, therefore, the
independent demand (forecasted from customers) is the same as the dependent demand.
might attempt to consider that when the demand for items occurs together, that this is similar
to a bill of materials.
However, this is not a bill of materials, but rather a causal relationship
making it easier to forecast.
Distinguish between in-process inventory, safety stock inventory, and seasonal inventory.
In-process inventory consists of those items of materials components and partially completed
units that are currently in the production process.