What is the concept of "vendor managed inventory" (VMI)?

Vendor Managed Inventory (VMI) is a collaborative supply chain practice where the supplier takes responsibility for managing inventory levels at the customer's location. This means that the supplier monitors stock levels, forecasts demand, and decides when to replenish inventory, thus taking the operational burden off the customer. By allowing suppliers to manage inventory, companies can improve efficiency, reduce stockouts, and optimize inventory turnover, leading to better alignment between supply and demand.

In this context, the other options do not accurately reflect the VMI concept. Option A suggests that customers solely manage their own inventory, which is the opposite of what VMI entails. Option C implies that all inventory is stored at the supplier's warehouses, neglecting the key aspect that inventory is kept at the customer location but managed by the supplier. Option D limits the scope to perishable goods, while VMI can apply to various types of inventory, not just those that have a limited shelf life. Thus, the focus of VMI is specifically on the supplier's role in managing the customer's inventory, making the correct answer the one that highlights this supplier-centric management approach.