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Question 292 - CSCP discussion

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A company has designed its supply chain so that financial losses in one part of the supply chain will be offset by gains in another part. The company is employing which of the following strategies to address global risk?

A.
Speculation
Answers
A.
Speculation
B.
Flexibility
Answers
B.
Flexibility
C.
Product shifting
Answers
C.
Product shifting
D.
Hedging
Answers
D.
Hedging
Suggested answer: D

Explanation:

Hedging is a strategy used to mitigate risk by taking offsetting positions in related markets to balance potential losses in one part of the supply chain with gains in another. This approach is particularly useful in global supply chains where fluctuations in currency exchange rates, commodity prices, or market conditions can impact different parts of the supply chain differently. By employing hedging strategies, companies can protect themselves from adverse financial impacts and stabilize their overall financial performance. Options A, B, and C are different strategies but do not specifically address the financial balancing described.

Chopra, S., & Meindl, P. (2015). Supply Chain Management: Strategy, Planning, and Operation.

https://www.investopedia.com

asked 16/09/2024
Jesus Vargas
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