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27 August, 22:19

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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  1. 27 August, 22:37
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    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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