Which inventory practice involves keeping inventory at the buyer's site with replenishment triggered by supplier recommendations?

Which inventory practice involves keeping inventory at the buyer's site with replenishment triggered by supplier recommendations?

• A. Co-Managed Inventory (CMI)
• B. Vendor-Managed Inventory (VMI)
• C. Supplier Co-Location
• D. Corporate Social Responsibility (CSR)

Answer: (A)

Vendor-managed inventory is when the supplier takes responsibility for monitoring stock levels at the buyer’s site and triggers replenishment based on usage data and pre-agreed thresholds or recommendations. The inventory sits at the buyer’s location, but the supplier controls the replenishment process, reducing stockouts and administrative burden for the buyer because restocking decisions come from the supplier’s side using real-time data. This differs from co-managed inventory, where both parties share control and responsibilities over stock decisions rather than having the supplier drive replenishment autonomously. The other options address unrelated concepts, so they don’t describe the described arrangement.

Vendor-managed inventory is when the supplier takes responsibility for monitoring stock levels at the buyer’s site and triggers replenishment based on usage data and pre-agreed thresholds or recommendations. The inventory sits at the buyer’s location, but the supplier controls the replenishment process, reducing stockouts and administrative burden for the buyer because restocking decisions come from the supplier’s side using real-time data.

This differs from co-managed inventory, where both parties share control and responsibilities over stock decisions rather than having the supplier drive replenishment autonomously. The other options address unrelated concepts, so they don’t describe the described arrangement.