Please explain about Product and customer hierarchies.
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Then Hierarchy itself denotes that it is how the objects (Product/Loc/Res etc) are linked with each other, which comes first (nodes) n which comes last, How the grouping done on each layer of node etc.
Hierarchies are used in Aggregated Planning, Rough example how BOM may works, its kind of similar to that.
Try exploring SCN and Googling before posting a question, you'll find lotta useful information by which you can find your answer yourself.