Supply Chain Management Professional (SCMP) · Question
What is the main advantage of using a 'consignment inventory' model for a buyer?
In consignment, the supplier retains ownership of the inventory until it is sold or used by the buyer, transferring holding costs and obsolescence risk to the s
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Question: What is the main advantage of using a 'consignment inventory' model for a buyer?
Answer options:
- Buyer owns the inventory immediately upon receipt. ✅ Reduced inventory holding costs and risk until sale.
- Guaranteed lowest unit price from the supplier.
- Increased control over inventory replenishment schedules.
Correct answer: Reduced inventory holding costs and risk until sale.
Explanation: In consignment, the supplier retains ownership of the inventory until it is sold or used by the buyer, transferring holding costs and obsolescence risk to the supplier.
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