Retail Supply Chain & Replenishment Flashcards

A retailer uses a vendor-managed inventory (VMI) model. Which party is primarily responsible for determining replenishment quantities under this arrangement?

Answer: The vendor/supplier

In a VMI arrangement, the vendor takes ownership of monitoring stock levels and deciding when and how much to replenish at the retailer's location.

Which metric best measures how efficiently a retailer converts inventory investment into sales revenue over a given period?

Answer: Gross margin return on investment (GMROI)

GMROI combines gross margin and inventory cost, showing the gross profit earned for every dollar invested in inventory.

A retailer's distribution center receives a mixed-SKU pallet that must be broken down and re-sorted before store delivery. This process is called:

Answer: Sortation

Sortation is the DC process of separating mixed units or cases by destination store or SKU after receiving.

When a retailer sets a reorder point (ROP), which two variables are the primary inputs?

Answer: Lead time and average daily demand

ROP = average daily demand × lead time (plus safety stock), making lead time and daily demand the core inputs.

A fashion retailer receives 500 units of a seasonal jacket but only sells 350 by season end. What is the sell-through rate?

Answer: 70%

Sell-through = units sold ÷ units received = 350 ÷ 500 = 70%.

Which supply chain strategy involves a retailer receiving goods at a DC and immediately transferring them to outbound trucks with little or no storage time?

Answer: Cross-docking

Cross-docking transfers inbound shipments directly to outbound vehicles, minimizing storage time and DC handling costs.

A retailer's purchase order specifies a 'routing guide.' What does this document govern?

Answer: The approved carriers, packaging, and labeling requirements for supplier shipments

A routing guide outlines the retailer's preferred carriers, shipment methods, packaging standards, and compliance requirements that vendors must follow.