What is primary demand?
In order for a company to be able to plan sensibly and, above all, in a commercially correct manner, it needs a so-called requirements determination. This involves determining how much demand there is for the materials required for production - in terms of demand times as well as concrete demand quantities. A company is faced with the challenge of combining customer demand and other aspects well. Otherwise, there is a risk of oversupply or undersupply, each of which entails costs and effort. In this context, the so-called primary demand stands for the demand for products, intermediate products, spare parts, etc., which are sold directly to customers.
Depending on experience and industry, the primary demand is then calculated by means of a deterministic (program-oriented) demand calculation or a stochastic (consumption-oriented) demand calculation. Subjective estimates and clearly rule-based procedures are also used in isolated cases.