Corporations typically begin hedging materials purchases at what amount?

Question

The reason being, I'm fresh out of college and my small company (2bil USD revenue) is considering hedging and they asked me to do a cost/benefit. I'm just wondering what amount would be considered material.

Answer 1

Companies try to maintain a supply line, or inventory of a set number of days.  For example, grocery stores may want to have 4 days worth of milk on the shelf.  When the store predicts that milk purchases will fall off (people on vacation, people drinking more coke), they 'hedge' their future purchase of milk.

Forecasting is very complex and requires knowledge of statistics, economics, planning, and accounting.  It is probably beyond the scope of Yahoo! answers.