Which One of the Following Statements Is True About Vendor-Managed

question 36

Multiple Choice

Which one of the following statements is true about vendor-managed inventory (VMI) ?

• A)VMI is a form of outsourcing.
• B)VMI often increases the bullwhip effect.
• C)VMI is used only in responsive supply chains.
• D)VMI is identical to contract manufacturing.

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Definitions:

Average Total Cost

Calculated as the total cost of production (fixed plus variable costs) divided by the total output, indicating the average cost per unit produced.

Average Variable Cost

The total variable costs (costs that vary with production volume) divided by the quantity of output produced, representing the variable cost per unit.

Net Present Value (NPV)

The difference between the present value of cash inflows and the present value of cash outflows over a period of time. It's used to evaluate the profitability of an investment or project.

Capital Investment Funds

Financial resources that are used by a company to purchase physical assets like property, industrial buildings, or equipment.