Question

The practice of buyers allowing suppliers to observe their demand, create a forecast, and determine their resupply schedules in the hopes of reducing inventories is called?

1) Order Batching
2) Forward Buying
3) The Legacy System
4) VMI

Answer 1

VMI (Vendor Managed Inventory) is the practice of buyers allowing suppliers to observe their demand, create a forecast, and determine their resupply schedules in the hopes of reducing inventories.

Step-by-step explanation:

The practice of buyers allowing suppliers to observe their demand, create a forecast, and determine their resupply schedules in the hopes of reducing inventories is called VMI (Vendor Managed Inventory).

VMI is a business model where suppliers take responsibility for managing and replenishing inventory based on real-time data received from buyers. This approach helps to streamline supply chain operations, reduce stockouts, and minimize overall inventory carrying costs.

An example of VMI is when a retailer shares its sales data with a supplier, who then uses that information to predict demand and proactively restock the retailer's inventory.