Dependent demand is the requirement for stock item which is directly related to and therefore de-

pendent upon the rate of production (examples are: raw materials, components, energy)

Independent demand is the requirement for stock item which is not directly related to, and is

therefore independent of rate of production. Although independent demand is called thus, it can still

be influenced by economic factors external to the demand-supply model such as general consumer

sentiment and consumers' available disposal income. However, businesses that need to predict the

number of products with independent demand needed to sate their customers have it easier than

businesses that must calculate the demand for products with dependent demand because there are

fewer factors to consider.

In this scenario, the new drug is finished good which is dependent on the demand of the market, and

the firm needs to forecast before initiating the production process. The item is independent from

rate of production, therefore, it must be independent demand item.

Reference: CIPS study guide page 95-98

LO 2, AC 2.1