Question

This is the type of demand that is most appropriate for using forecasting models?

Short answer

Independent demand is most appropriate for using forecasting models.

Step-by-step solution

Definition of Forecasting Demand

Forecasting demand is required at these decoupling points to set appropriate inventory levels for the buffers. The particular setting of those levels is “Inventory Management,” but a vital input into those decisions could be a forecast of expected demand and also the expected error related to that demand.

If, for instance, we can forecast demand very accurately, then inventory levels may be set precisely to expected customer demand.

Independent demand

Independent Demand occurs by the request of consumers for products, kit products, and repair parts. This demand also individually and independently happens for every item and has no relationship with other items.

Thus, it is used because it is to line up the assembly plan. Additionally, the item to be independently demanded is termed an Independent Demand Item, which is typically used for production planning and isn't used for MRP.