Question 149 - CPIM-Part-2 discussion

The question is about forecasting the demand for a product, and the options are different levels of aggregation or disaggregation. The highest percentage of error will occur at the most disaggregated level, which is the field warehouses. The field warehouses are the locations where the finished products are stored and delivered to the customers. The demand at the field warehouses is affected by various factors, such as customer preferences, seasonality, promotions, and competition. The demand at the field warehouses is also more volatile and uncertain than the demand at the higher levels of aggregation, such as the market segment or the central warehouse. Therefore, forecasting the demand at the field warehouses will have the highest percentage of error, which means that the forecast will deviate more from the actual demand.

The other options are not the levels where the highest percentage of error will occur. The master schedule is not a level of aggregation or disaggregation, but a plan that specifies the quantity and timing of finished products to be produced in a given period. The master schedule is based on the forecasted demand, the customer orders, and the production capacity. The master schedule does not have a percentage of error, but it may have a variance or deviation from the actual production output. The market segment is a level of aggregation that groups the customers or products based on their common characteristics or needs. The market segment is a higher level than the field warehouses, and it has less variability and uncertainty in demand. Therefore, forecasting the demand at the market segment will have a lower percentage of error than forecasting at the field warehouses. The central warehouse is a level of aggregation that consolidates the inventory from different sources and distributes it to different destinations. The central warehouse is a higher level than the field warehouses, and it has less variability and uncertainty in demand. Therefore, forecasting the demand at the central warehouse will have a lower percentage of error than forecasting at the field warehouses.