The practice whereby a manufacturer has inventories of materials on consignment from its suppliers falls under the scope of:
A) inventory pooling control.
B) virtual distribution.
C) electronic inventory control.
D) vendor-managed inventories.

Question

Quizplus · Accepted Answer

The practice described in the question where a manufacturer has inventories of materials on consignment from its suppliers is commonly known as vendor-managed inventory (VMI). In VMI, the supplier is responsible for managing the inventory of the manufacturer, including replenishing the stock when necessary. This helps the manufacturer to achieve cost savings and increase efficiency by reducing the need for inventory tracking and control. Thus, option D, i.e., vendor-managed inventory is the correct choice.

The Practice Whereby a Manufacturer Has Inventories of Materials on Consignment