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Highland Park Wood Company (Abridged)

Bell, David E.

Product #:122098
Supplier:Harvard Business School
Discipline:Marketing
Setting:Texas, 1987
Details:Case (PDF) • 4 pages • 2022-04-04 (Rev: 2023-04-10)

Subjects:

HedgingRisk managementStrategySales and marketingMarketing

Industries:

Agriculture sector

Geography:

TexasUnited States
Your Price:$12.40

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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.

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Case Study: Highland Park Wood Company (Abridged) (English version) | Ivey Publishing