One electronics manufacturer manages risk by making agreements with factories well in advance to guarantee productive capacity at an agreed price

If their product is popular, then they can use that productive capacity during an otherwise busy season at a lower cost. Such an agreement could best be described as:

A) a futures contract.

B) low-cost hopping.

C) theory of constraints management.

D) the bullwhip effect.

Question

Business

Paxton Hardy

8 November, 10:41

One electronics manufacturer manages risk by making agreements with factories well in advance to guarantee productive capacity at an agreed price

If their product is popular, then they can use that productive capacity during an otherwise busy season at a lower cost. Such an agreement could best be described as:

A) a futures contract.

B) low-cost hopping.

C) theory of constraints management.

D) the bullwhip effect.

+2

Answers (1)

Know the Answer?

Armani Hall · Answer 1

The answer to this question is option A a futures contract.

Explanation:

Based on the scenario in the question, the agreement could be described as a futures contract

A futures contract is a legal agreement to buy or sell a particular commodity asset, or security at a predetermined price at a specified time in the future. Futures contracts are standardized for quality and quantity to facilitate trading on a futures exchange.

Hence the answer is A a futures contract.