Question

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.

Answer 1

Answer:A) a futures contract.

Explanation:A future Contract is a deal you agree with someone to buy or sell something in the future (the clue’s in the name) at a price agreed today. That 'something' can be anything – a share, a commodity, a currency – and delivery can be months away, if ever. The point is that the price is agreed here and now.

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.

Answer 2

Answer:

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.