What is an example of random variation in inventory demand?

Random variation in inventory demand refers to fluctuations that are unpredictable and not based on any specific trend or seasonality. Tornadoes, as an example of random variation, can lead to sudden increases in demand for certain types of inventory—such as emergency supplies, building materials, or food—due to unexpected disasters. These demand spikes occur without prior indication or regularity, making them random and difficult to forecast.

In contrast, seasonal peaks are predictable variations that occur at certain times of the year, such as increased demand for holiday items. Cyclical trends refer to repeating patterns of demand influenced by broader economic cycles, and market growth is generally a sustained increase over time that tends to follow predictable patterns as the market expands. Therefore, the correct choice emphasizes an unpredictable event that creates random demand fluctuations, aligning closely with the concept of random variation in inventory management.