CPIM Practice Exam

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How does independent demand differ from dependent demand?

Independent demand is based on production levels
Dependent demand is not influenced by the demand for other items
Independent demand is not related to the demand for other items
Dependent demand accounts for seasonal variations

The correct answer is: Independent demand is not related to the demand for other items

Independent demand is characterized by its lack of direct connection to the demand for other items. It represents the demand for finished goods or end products that consumers purchase directly, and it's influenced primarily by market trends, consumer preferences, and external factors. Since independent demand operates independently, it does not depend on the demand for any other products. This is in stark contrast to dependent demand, which is determined by the production levels of other items, such as components or raw materials that are required to produce a finished good. The clarity in distinguishing independent demand as being standalone helps supply chain managers in forecasting, inventory management, and production planning, as strategies for handling independent demand will differ significantly from those used for dependent demand.