Management Glossary

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hedge inventory

Excess inventory that is intentionally held to protect against an unexpected event, such as a fire, natural disaster or labor strike, that might prevent the timely replenishment of that inventory. A hedge inventory of finished goods may be kept to ensure that, if such an event should occur, the company will still have goods to sell to its customers. A hedge inventory of parts or raw material may be kept to ensure that company has adequate supplies to continue operations should its suppliers' production be halted by an unexpected disruptive event.

Contributed by: Managerwise Staff

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