Product details

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Compact case
Abridged version
-
Reference no. 9-122-098
Subject category: Marketing
Published by: Harvard Business Publishing
Originally published in: 2022
Version: 10 April 2023
Revision date: 2-May-2023
Length: 4 pages
Data source: Generalised experience

Abstract

A major home builder wishes to purchase lumber (Southern pine). The builder wants delivery in six months but prefers to lock-in the price near current rates. The lumber wholesaler must decide on a pricing and sourcing strategy. Examples include: 1) buy & hold, 2) wait and see, and 3) hedge with futures. There is no futures market in Southern pine, but there is a market in Hem-Fir (a somewhat similar wood). Data on historical spot and futures prices is provided.
Other setting(s):
1987

About

Abstract

A major home builder wishes to purchase lumber (Southern pine). The builder wants delivery in six months but prefers to lock-in the price near current rates. The lumber wholesaler must decide on a pricing and sourcing strategy. Examples include: 1) buy & hold, 2) wait and see, and 3) hedge with futures. There is no futures market in Southern pine, but there is a market in Hem-Fir (a somewhat similar wood). Data on historical spot and futures prices is provided.

Settings

Other setting(s):
1987

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