APICS Certified Supply Chain Professional (CSCP) — Question 220

Which of the following actions hedges against commodity price fluctuations in a supply chain?

Answer options

• A. Purchase always from the lowest bidder.
• B. Increase safety stock levels.
• C. Establish an online auction site.
• D. Purchase future options.

Correct answer: D

Explanation

Purchasing future options allows a company to lock in prices for commodities, providing a hedge against price volatility. The other options either do not directly address price fluctuations or could lead to increased costs without guaranteed benefits.