APICS Certified in Logistics, Transportation and Distribution (CLTD) — Question 110

Consignment inventory requires that manufacturers:

Answer options

• A. deliver their products to the consumer and payment from consumers is based on supply.
• B. stock their products on retail stores shelves and payment from consumers is based on forecast.
• C. deliver their products to the consumer and wait for payment until consumers requires to refill stock level.
• D. stock their products on retail stores shelves and wait for payment until consumers purchase the product.

Correct answer: D

Explanation

The correct answer, D, accurately describes the consignment inventory model where retailers do not pay until the products are sold to consumers. Option A incorrectly states that payment is based on supply rather than actual sales. Option B suggests payment is based on a forecast, which does not align with the consignment model. Option C implies that payment is deferred until a restock is needed, which is not how consignment works.