Question

PP.18 A "mix hedge"...(Check all that apply.)

Answer 1

Answer:

A mix hedge reduces levels of expensive  FG inventory while slightly increasing component inventories.

A mix hedge is a planning technique which supports increased production flexibility

Explanation:

Hedging inventory implies a level of inventory that is kept to shield against unexpected event such as breakdown of machines,strikes,surge in demand for product or non-availability of raw materials due to disruption in supplier's business.

However, mix hedge is required to ensure the right of mix of inventories at every point in time so as to avoid investing more than required resources in inventory by keeping low volume  of expensive items of inventory and at the same time increasing the number of inventories kept overall,such that  risk associated with inventory can be shared by a number of items of inventory instead of a single line of inventory.