APICS Certified Supply Chain Professional (CSCP) — Question 111

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?

Answer options

• A. Speculation
• B. Flexibility
• C. Product shifting
• D. Hedging

Correct answer: D

Explanation

The correct answer is D, Hedging, which involves taking measures to offset potential losses by balancing them with gains elsewhere. Speculation (A) implies taking risks in hopes of profit without offsetting losses, while flexibility (B) refers to the ability to adapt to changes, and product shifting (C) involves changing product lines, none of which specifically address the offsetting of financial losses.