CPIM Practice Exam

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Prepare for the CPIM Exam. Study with flashcards and multiple choice questions, each question has hints and explanations. Get ready for your exam!

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What risk does hedge inventory planning often address?

Increased customer demand
Flexible pricing strategies
Potential disruptions like labor strikes
Improved supply chain visibility

The correct answer is: Potential disruptions like labor strikes

Hedge inventory planning is a strategy employed primarily to mitigate risks associated with uncertainties in supply chain operations. The correct answer focuses on how hedge inventory is specifically designed to protect against potential disruptions, such as labor strikes, natural disasters, or other unexpected events that could hinder the flow of goods. By holding additional inventory as a hedge, organizations can ensure that they continue to meet customer demand even when these disruptions occur. This strategic reserve acts as a buffer, allowing companies to maintain production levels and fulfill orders without significant delays, ultimately supporting customer satisfaction and operational stability in times of uncertainty. The other options, while relevant to supply chain and inventory management in different contexts, do not align with the primary goal of hedge inventory planning as directly as addressing potential disruptions does.