Certified Supply Chain Professional (CSCP) Practice Exam

When the supplier manages inventory at the customer's location, what is determined by the supplier?

1. Only the color of the packaging

2. Size and frequency of orders

3. Sales pricing for individual items

4. Location of the customer's store

The correct answer is: Size and frequency of orders

When a supplier manages inventory at the customer's location, they typically have a significant role in determining the size and frequency of orders. This arrangement implies a collaborative approach where the supplier monitors stock levels at the customer's site and makes decisions on replenishment based on sales data and inventory levels. The supplier's objective is to maintain optimal inventory levels to ensure that the customer has enough stock on hand without overstocking, which can lead to higher costs and waste. By managing these aspects, the supplier can streamline operations, reduce stockouts, and improve overall efficiency in the supply chain. This type of arrangement is often part of inventory management strategies like Vendor-Managed Inventory (VMI), where the supplier takes on responsibility for ensuring that the customer's inventory levels meet demand. Other options do not align with the responsibilities typically associated with supplier-managed inventory. The color of the packaging is more of a branding decision, sales pricing is usually determined by the market or the retailer rather than directly influenced by suppliers, and the location of the customer's store is typically decided by the customer based on strategic business considerations.