Stockless Purchasing is best described as which system?

• A. System whereby the buying organization has no responsibility for inventory of the goods being purchased
• B. System where the supplier holds all inventory
• C. System with perpetual inventory by the buying organization
• D. System requiring supplier-managed stock with automatic replenishment

Answer: (A)

Stockless purchasing shifts the responsibility for stocking and inventory control away from the buying organization to the supplier. The buyer does not carry or manage inventory; instead, the supplier holds the stock and supplies goods to meet demand as needed. This arrangement reduces the buyer’s inventory carrying costs and risk, since ownership and control of the stock lie with the supplier until delivery or consumption.

The other descriptions miss important nuances: saying the supplier holds all inventory implies ownership of everything the supplier has, which isn’t accurate—the stock held is specifically for the buyer’s needs. Perpetual inventory by the buying organization contradicts stockless practice, where the buyer does not continuously track on-hand inventory. Requiring automatic replenishment describes a vendor-managed or automated system, which is not an essential hallmark of stockless purchasing; stockless centers on who holds and manages the stock, not the method of replenishment.