A company which produces electricity, like Progress Energy, is considering buying extra coal to hold in inventory. They want to buffer again

Question

A company which produces electricity, like Progress Energy, is considering buying extra coal to hold in inventory. They want to buffer against a potential strike at a major coal producer which would likely result in a significant price increase. This type of inventory is

A. Safety stock
B. Cycle stock
C. Anticipation
D. Hedging

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Thu Nguyệt 4 years 2021-07-28T21:42:17+00:00 1 Answers 21 views 0

Answers ( )

  1. bonexptip
    0
    2021-07-28T21:43:28+00:00
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    Answer:

    D. Hedging

    Explanation:

    Hedge inventory is the abundance inventory bought or kept in stock as a buffer with the goal of diminishing or restricting dangers related with future value changes or to exploit it

    So, if a company like Progress Energy, is considering buying extra coal to hold in inventory. They want to buffer against a potential strike at a major coal producer which would likely result in a significant price increase. This type of inventory is hedging.

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