In the sourcing/purchasing design matrix, there are three variables: contract duration, transaction costs, and specificity. Assume levels as short, medium and long for contract duration and for the rest, low, medium, and high. Vendor managed inventory belongs to
A) long contract duration, high transaction costs and low specificity.
B) short contract duration, high transaction costs and low specificity.
C) long contract duration, low transaction costs and low specificity.
D) long contract duration, high transaction costs and high specificity.
E) long contract duration, low transaction costs and high specificity.

Question

Quizplus · Accepted Answer

Vendor managed inventory typically involves long-term relationships with suppliers, which implies long contract duration. It also aims to reduce transaction costs by streamlining inventory management. However, it often requires high specificity due to the tailored nature of inventory management solutions.

In the Sourcing/purchasing Design Matrix, There Are Three Variables: Contract