Which arrangement stores a specific quantity of an item at the buyer's location with supplier-recommended orders when stock falls below a threshold?

Which arrangement stores a specific quantity of an item at the buyer's location with supplier-recommended orders when stock falls below a threshold?

• A. Co-Managed Inventory (CMI)
• B. Vendor-Managed Inventory (VMI)
• C. Supplier Co-Location
• D. Ethical Sourcing

Answer: (A)

Co-Managed Inventory is a collaborative approach where both buyer and supplier oversee inventory levels and replenishment. The stock sits at the buyer’s facility, and decisions about when to reorder and how much to reorder are shared or guided by the supplier’s recommendations. The scenario described—holding a defined quantity at the buyer’s location with replenishment driven by supplier-recommended orders when stock falls below a threshold—fits this collaborative model because replenishment is guided by the supplier while the buyer maintains the on-site inventory. In contrast, vendor-managed inventory would lean more toward the supplier taking primary control of monitoring and placing replenishment orders; supplier co-location focuses on locating supplier facilities near the buyer rather than on joint inventory management; ethical sourcing concerns procurement ethics rather than how inventory is managed at the buyer’s site.

Co-Managed Inventory is a collaborative approach where both buyer and supplier oversee inventory levels and replenishment. The stock sits at the buyer’s facility, and decisions about when to reorder and how much to reorder are shared or guided by the supplier’s recommendations. The scenario described—holding a defined quantity at the buyer’s location with replenishment driven by supplier-recommended orders when stock falls below a threshold—fits this collaborative model because replenishment is guided by the supplier while the buyer maintains the on-site inventory.

In contrast, vendor-managed inventory would lean more toward the supplier taking primary control of monitoring and placing replenishment orders; supplier co-location focuses on locating supplier facilities near the buyer rather than on joint inventory management; ethical sourcing concerns procurement ethics rather than how inventory is managed at the buyer’s site.