In a Vendor Managed Inventory (VMI) system, who manages inventory and replenishment decisions?

In a Vendor Managed Inventory (VMI) system, who manages inventory and replenishment decisions?

• A. The supplier.
• B. The buyer.
• C. A third-party logistics provider.
• D. The manufacturer's purchasing agent.

Answer: (A)

In a Vendor Managed Inventory setup, the supplier takes responsibility for inventory levels and when to restock. The supplier has access to the customer’s stock data and usage patterns, and uses that information to trigger replenishment so products are available when needed. The buyer still collaborates by sharing data and agreeing on service levels, but does not decide the timing or quantity of orders. A third-party logistics provider handles storage and transportation, not the decision-making about inventory replenishment. A manufacturer's purchasing agent is part of the buyer’s procurement function and does not manage replenishment decisions at the supplier’s side. Therefore, the supplier is the one responsible for both inventory management and replenishment decisions.

In a Vendor Managed Inventory setup, the supplier takes responsibility for inventory levels and when to restock. The supplier has access to the customer’s stock data and usage patterns, and uses that information to trigger replenishment so products are available when needed. The buyer still collaborates by sharing data and agreeing on service levels, but does not decide the timing or quantity of orders. A third-party logistics provider handles storage and transportation, not the decision-making about inventory replenishment. A manufacturer's purchasing agent is part of the buyer’s procurement function and does not manage replenishment decisions at the supplier’s side. Therefore, the supplier is the one responsible for both inventory management and replenishment decisions.