7. Procurement under Raw Material Price Fluctuations

In today’s business environment, every organization faces some risk of fluctuation in the price of raw materials and commodities. In production, manufacturers may rely on a significant amount of raw materials, and as a result can be especially impacted by price volatility in the raw materials they procure directly and indirectly through components and subassemblies. For example, metal processing and food production are two industries with direct exposure to the risk of raw material price volatility. Ryerson Inc., a metal processing firm with multibillion-dollar sales each year, relies heavily on carbon, stainless steel, and aluminum in its processing and production of various fabricated products. ...

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