Which of the following actions hedges against commodity price fluctuations in a supply chain?
Which of the following actions hedges against commodity price fluctuations in a supply chain?
Hedging against commodity price fluctuations involves using financial instruments or market strategies to offset potential losses. One effective method is to purchase future options, which allows a company to lock in a price for a commodity and thus protect itself against price volatility. This ensures price stability and mitigates the risk associated with fluctuating commodity markets.
Purchase future options.
The answer is D. Purchase future options.
D. Purchase future options. One effective method for hedging against commodity price fluctuations is to purchase future options. By doing so, a company can lock in a price for a commodity and protect itself against price increases in the future. This helps to ensure price stability and mitigate the risk associated with volatile commodity markets.