One commonly asked question in SAP interviews is relating to product hierarchies.

Q). What is a Product Hierarchy?

Answer: In SAP, a product hierarchy is used for pricing. A product hierarchy is an alphanumeric character string which consists of 18 characters at the most. Product hierarchy thus define the product and its composition. To take an example, a product hierarchy could be 00010002000300040005. The first four characters 0001 could indicate that the product is a car. The next four characters could indicate 0002 the plant in which the car has been manaufactured. The third set of characters could indicate the color of the car. The next set may determine its engine capacity and so on. Thus, the product hierarchy helps in defining the product composition.

More Interview Questions on SAP

Controlling Area in SAP
Copy Control in SAP
Consignment Processing in SAP SD
User Exits in SAP