Derived demand refers to forecasting?

• A. Derived demand - complicated forecasting of commodities
• B. Forecasting of long-term growth
• C. Forecasting of commodities
• D. Forecasting inventory levels

Answer: (A)

Derived demand is the demand for inputs that comes from the demand for the final products. When you forecast production needs, you first estimate the final demand, and from that you derive how much of the inputs or commodities (like raw materials and components) will be required. So forecasting the demand for these input commodities—driven by the forecasted final demand—is what derived demand describes. This is why the best description among the options is the forecasting of the commodities used in production.