The temperature input found in the Location screen should be the temperature the cattle are exposed to. This does not necessarily mean the outside temperature in all situations.
Cattle in freestalls will experience a different temperature than ones outside. It is very important to change the location temperature as the environmental temperature changes—at least seasonally. That number has an effect on DIM and Feed Efficiency. A Dairy cow’s ideal thermo neutral zone is between 45-55° F. As the temperature deviates from this ideal, effects are seen in reduced production and feed efficiency. Dairy farmers most notice heat stress as a factor in lactating cows and cold stress affecting dry cows and young stock. Higher humidity will compound the effects. The graph below from a paper on Low Profile Cross Ventilated Freestall Facilities by J.F. Smith, J.P. Harner, B.J. Bradford, and M.W. Overton (2008) shows the effect of temperature on DMI and Feed Efficiency.