How can demand variability affect master planning?

Demand variability refers to the fluctuations in customer demand for products over a specific period. When the demand is unpredictable or varies greatly, it can directly influence the accuracy of forecasts used in master planning. Inaccurate forecasts can lead to stockouts—when there isn't enough inventory to meet demand—resulting in lost sales and dissatisfied customers. Alternatively, it can create situations where there is excess inventory, which ties up capital and increases storage costs, ultimately impacting profitability.

The effects of demand variability necessitate a careful approach to master planning, as planners must account for potential discrepancies between expected and actual demand. This often involves using techniques like safety stock calculations, demand smoothing, or advanced forecasting methods to enhance the reliability of planned stock levels.

In contrast, the other options do not accurately reflect the relationship between demand variability and master planning. For instance, suggesting that demand variability will always improve forecast accuracy is misleading, as this variability typically complicates forecast reliability. Proposing that it eliminates the need for inventory management tools overlooks the essential role these tools play in managing uncertainty. Stating that it has no significant impact on master planning ignores the fundamental challenges presented by demand fluctuations, which can affect supply chain efficiency and customer satisfaction.