Question
What is the condition for vendor managed inventory to be successfully implemented? the buying firm manages its own inventory the response time (e.g replenishment) is not the primary concern the buying firm can make marginally accurate forecasting about demands providing information to your vendor the access to your inventory data across all the warehouses and sales data
Answer
4.4
(262 Votes)
Meredith
Elite · Tutor for 8 years
Answer
D
Explanation
Vendor Managed Inventory (VMI) is a streamlined approach to inventory management and order fulfillment where the supplier manages the inventory at the customer's location. To successfully implement the VMI operation, the two parties involved - the vendor (supplier) and the vendee (buyer/customer) - must have a high degree of cooperation.The provided options state how a VMI system would look under different conditions.A. If the buying firm manages its own inventory, this counts against the essential nature of VMI as it insinuates the inventory component is not managed by the vendor, hence this doesn't fit the VMI model.B. Considering the response time (for example, replenishment) is not the primary concern doesn't follow the principles of VMI as well since timely replenishments are fundamental to ensure the vendor can meet the customer's needs promptly.C. The buying firm's capacity to make reasonably accurate demand forecasts may contribute to VMI's success, however, ideally, a vendor typically drives this operation and basing it on the buying firms strength can be a bit shaky.D. Lastly, offering vendors unrestricted access to inventory info across all warehouses and sales data, forms the backbone of VMI as it enables the vendor to keep track of your stock and ensure you never run out.