Final answer:
Vendor Managed Inventory (VMI) is a business model where inventory management is delegated to the supplier. The supplier monitors and replenishes the buyer's stock as needed, which can lead to a more efficient supply chain and reduced costs.
Step-by-step explanation:
Vendor Managed Inventory (VMI) is a business model where inventory management is delegated to the vendor (supplier), which involves the vendor maintaining the buyer's inventory levels. The vendor monitors the buyer's inventory levels and makes replenishment decisions to ensure adequate stock is available to meet demand. This approach can lead to a more efficient supply chain by reducing the likelihood of stockouts or overstock situations. The correct answer to the question about what vendor managed inventory is all about is b. Letting your supplier take care of your inventory. This includes tasks such as monitoring stock levels and ensuring that the correct amounts of products are delivered at the right time. Some vendors may also provide warehousing services, but this is not the primary function of VMI. By adopting a VMI approach, companies can potentially benefit from reduced inventory carrying costs, improved service levels, and stronger relationships with suppliers. However, it requires a significant level of trust and collaboration between the buyer and the vendor, as well as effective communication and data sharing.