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Question 314

Which supply chain activity would improve the cash flow cycle time of a manufacturing firm?

The manufacturer increases both revenue and profit by adding additional customers in regions not served in the past.

As part of a strategic alliance, the manufacturer agrees to decrease net payment terms on the supplier's contracts.

The manufacturer takes ownership of the inventory at the customer's retail outlet via a customer mandated vendor-managed inventory (VMI) program.

The manufacturer reduces transit time on inventory owned by the firm through an effective lean program.

Correct Answer: D

Reducing transit time on inventory owned by the firm through an effective lean program directly contributes to improving the cash flow cycle time. By speeding up inventory turnover and reducing the amount of time inventory is tied up in transit, the firm can more quickly convert that inventory into cash.

Discussion

Rajiv8047Option: D

The manufacturer reduces transit time on inventory owned by the firm through an effective lean program.