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Distinguish between dependent and independent demand in a McDonald's in an integrated manufacturer of 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 (dependent demand).
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. Given 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 internally. The demand for the number of copiers is independent (must be forecasted). Given the forecast, the Bill of Materials is exploded to determine the amounts of raw materials, components, parts, etc. that are needed.
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. One 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.
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Distinguish between dependent and independent demand in a McDonald's restaurant in an integrated manufacturer of personal copies and in a pharmaceutical supply house?
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