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It is a pleasure to announce that the 2008 Manufacturing & Service Operations Management Best Paper is "Hedging Inventory Risk Through Market Instruments," by Vishal Gaur and Sridhar Seshadri (2005). This annual award is given to a paper, published in one of the prior three volumes of M&SOM, deemed by the M&SOM editorial board to be most deserving for its contribution to the theory and practice of operations management. For their accomplishment, Professors Gaur and Seshadri will share $2,000, which was contributed by the Manufacturing and Service Operations Management Society of INFORMS.
This paper asks an intriguing question-can a firm use financial hedging strategies to reduce the risk it faces from its inventory investment? The operations management literature is full of papers that offer advice on making optimal inventory decisions, but that literature had not considered how inventory decisions should change when there exists the possibility of creating a financial hedge. Of course, for a hedging strategy to be effective a firm needs...