In the sourcing/purchasing design matrix, there are three variables: contract duration, transaction costs and specificity (assume levels as short, medium and long for contract duration and for the rest, low, medium and high).Vendor managed inventory belongs to
A)long contract duration, high transaction costs and low specificity.
B)short contract duration, high transaction costs and low specificity.
C)long contract duration, low transaction costs and low specificity.
D)long contract duration, high transaction costs and high specificity.
E)long contract duration, low transaction costs and high specificity.

Question

Quizplus · Accepted Answer

Vendor managed inventory typically involves long-term relationships (long contract duration) with low transaction costs due to streamlined processes, and high specificity because it requires tailored solutions and close collaboration between the vendor and the buyer.

In the Sourcing/purchasing Design Matrix, There Are Three Variables: Contract