The retailer has a fairly good forecasting process and predicts end-use customer demand at 1,000 unit for the planning period (See Exhibit 1.) Because the forecast has typically experienced+/-10-perent error, the retailer orders 1,100 units from the wholesaler puts forecasting error at +/-10 percent. That means the wholesaler orders 1,100 plus 10percent (or 1,210 units) from the manufacturer. Similar assumptions are made all the way down the supply chain. (Note that we are assuming here, for simplicity’s sake, that is no BOM. If there, the logic would still hold, but the illustration would become unnecessarily complicated.)