Supply Chain Management Professional (SCMP) · Question
What is the main objective of using a 'consignment inventory' model?
In consignment, the supplier (consignor) retains ownership of goods until they are sold by the retailer (consignee), deferring the retailer's payment obligation
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Question: What is the main objective of using a 'consignment inventory' model?
Answer options: ✅ To defer payment until the goods are sold by the consignee
- To accelerate inventory turnover at the vendor's location
- To reduce shipping costs for the buyer
- To eliminate the need for physical inventory checks
Correct answer: To defer payment until the goods are sold by the consignee
Explanation: In consignment, the supplier (consignor) retains ownership of goods until they are sold by the retailer (consignee), deferring the retailer's payment obligation and inventory carrying costs.
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