APICS Certified Supply Chain Professional (CSCP) — Question 398

When a company operates in a vendor-managed inventory (VMI) environment, the cash-to-cash cycle time for the buying firm begins when it:

Answer options

• A. receives a fulfillment order.
• B. places a replenishment order.
• C. processes payment for a replenishment order.
• D. begins a production order.

Correct answer: B

Explanation

The cash-to-cash cycle time for the buying firm starts when it places a replenishment order because this marks the beginning of the purchasing process. Options A, C, and D occur after the replenishment order is placed, which means they do not initiate the cash-to-cash cycle.