CIM Vendor-Managed Inventory 3

Question 1

Which supply chain structure is VMI most closely associated with?

Accepted Answer

Collaborative planning, forecasting, and replenishment (CPFR)

Answer

VMI is a foundational element of CPFR, where both supplier and retailer share data and collaborate on replenishment decisions.

Question 2

A distributor using VMI for a hospital client sets a reorder point of 500 units and a target level of 1,200 units. Current stock is 480 units. What should the distributor do?

Accepted Answer

Replenish 720 units to restore the target level

Answer

When stock falls below the reorder point, the vendor replenishes up to the target level: 1,200 − 480 = 720 units.

Question 3

What is the main disadvantage VMI poses for the customer organization?

Accepted Answer

Loss of direct control over inventory replenishment decisions

Answer

Ceding replenishment decisions to the vendor means the customer must trust the supplier's judgment and data accuracy.

Question 4

Which industry was among the first to pioneer large-scale VMI implementation?

Accepted Answer

Mass-market retail / consumer packaged goods

Answer

Walmart and Procter & Gamble's partnership in the late 1980s is the landmark early VMI success story in consumer packaged goods.

Question 5

In a VMI contract, the vendor's replenishment authority is typically bounded by:

Accepted Answer

Min/max inventory parameters agreed upon with the customer

Answer

Min/max parameters define the floor (reorder point) and ceiling (target stock level) within which the vendor manages replenishment.

(CIM) Certified Inventory Manager Practice Test

(CIM) Certified Inventory Manager Practice Test

CIM Vendor-Managed Inventory 3