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Question 212 - CSCP discussion

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Which of the following actions is most likely to improve the cash-to-cash cycle time?

A.
Find suppliers with lower total cost of ownership (TCO)
Answers
A.
Find suppliers with lower total cost of ownership (TCO)
B.
Implement vendor-managed inventory (VMI) with key suppliers
Answers
B.
Implement vendor-managed inventory (VMI) with key suppliers
C.
Implement vendor-managed inventory (VMI) with key customers
Answers
C.
Implement vendor-managed inventory (VMI) with key customers
D.
Establish targeted promotions for the most profitable market segments
Answers
D.
Establish targeted promotions for the most profitable market segments
Suggested answer: B

Explanation:

Improving the cash-to-cash cycle time involves reducing the time taken to convert resources into cash flows. Implementing vendor-managed inventory (VMI) with key suppliers can significantly improve this cycle by reducing inventory holding costs and improving inventory turnover. In a VMI setup, suppliers manage the inventory levels of their products at the customer's location, ensuring optimal inventory levels and reducing stockouts and excess inventory. This arrangement improves cash flow as it reduces the amount of capital tied up in inventory. Finding suppliers with lower TCO, implementing VMI with customers, or targeting promotions, while beneficial, do not have as direct an impact on the cash-to-cash cycle time as VMI with suppliers.

Pfohl, H.-C. (2010). Logistics Management: An International Journal. Springer.

Watson, M., & Gallego, G. (2013). Revenue Management and Pricing Analytics. Springer.

asked 16/09/2024
Débora Gomes Almeida
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