For which elements of total demand is a forecasting system required, according to principles of production planning?

A forecasting system is essential for understanding and predicting various types of demand, particularly in production planning. Dependent demand refers to the demand for items that are required to produce higher-level items, which means that this demand is directly related to the production schedules of finished goods. A robust forecasting system is critical for accurately anticipating this demand, as it helps in planning the necessary materials and components needed for production without overstocking or understocking.

In production environments, particularly those following just-in-time (JIT) or lean methodologies, managing dependent demand effectively allows organizations to enhance their operational efficiency and reduce waste. Forecasting systems can utilize historical data and predictive analytics to provide insights into how many components or materials will be needed based on planned production volumes, leading to more accurate purchasing and inventory control.

The other forms of demand, such as end-item demand or replacement-part demand, may not require the same level of forecasting systems, as these can be managed through different inventory management strategies or order point systems. However, accurately managing dependent demand through forecasting is crucial to ensure that production processes remain smooth and disruptions due to material shortages are minimized.