Final answer:
Master Lock is implementing the risk mitigation strategy of pooling or aggregating demand. Pooling or aggregating demand involves combining the forecasts or demands for different products or types into a single forecast or demand, reducing the overall forecast error.
Step-by-step explanation:
The risk mitigation strategy that Master Lock is implementing by providing one forecast for bike locks each month instead of 237 forecasts for each type of bike lock is pooling or aggregating demand.
Pooling or aggregating demand involves combining the forecasts or demands for different products or types into a single forecast or demand, reducing the overall forecast error. In this case, Master Lock is consolidating the forecasts for the 237 types of bike locks into a single forecast, which is expected to be more accurate.
By pooling or aggregating demand, Master Lock can allocate resources more efficiently and have a better understanding of overall market demand, leading to improved inventory management and planning.
This risk mitigation strategy reduces variability in demand forecasts by combining multiple forecasts into a larger group or pool. By doing so, the company hopes to gain a more stable demand pattern that can be predicted with greater accuracy. It is a common approach taken by businesses to enhance forecast reliability and to reduce the costs associated with inventory mismatches.