HDM, a computer manufacturing company, holds computer parts in its inventory whose prices fall rapidly because suppliers can produce them faster, more efficiently, and in large quantities just a few months after they were first introduced on the market. HDM also uses a standard machine to assemble its computers. Over the last five years, the company that sells this machine has come up with a new, better performing piece of equipment every two years, rendering somewhat obsolete the assembler HDM bought earlier. What are the two types of risk HDM is exposed to, and what could it do to protect itself against these two sources of risk?
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