A vendor-managed supply system relates to which customer service factor of a supply chain?

• A. Pricing strategy and discounts
• B. Product design and innovation
• C. Marketing and advertising effectiveness
• D. Order fulfillment and inventory availability

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of a vendor-managed inventory (VMI) system. In VMI, the supplier or vendor takes responsibility for managing the inventory levels of their products at the customer's location.
2. Step 2: Recognize that VMI directly impacts how well orders are fulfilled because the vendor monitors stock levels and replenishes inventory as needed, reducing stockouts and delays.
3. Step 3: Identify that this system improves inventory availability by ensuring that the right amount of product is available when the customer needs it, which enhances service reliability.
4. Step 4: Compare the given options and note that pricing strategy, product design, and marketing effectiveness are not directly related to inventory management or order fulfillment.
5. Step 5: Conclude that a vendor-managed supply system is most closely related to the customer service factor of order fulfillment and inventory availability within the supply chain.