What inventory management approach involves the vendor managing the customer's inventory based on agreed-upon standards?

The inventory management approach that best fits the description of the vendor managing the customer's inventory based on agreed-upon standards is Vendor-managed inventory. In this approach, the supplier is responsible for maintaining inventory levels at the customer's location. The vendor monitors inventory usage and sales data to determine when to replenish stock, ensuring that the customer has the right amount of product available without overstocking. This arrangement enables better collaboration between the supplier and the customer, leading to more efficient replenishment processes and improved supply chain management.

Automatic replenishment generally requires the customer to set up specific triggers for when orders should be placed based on their internal data, rather than having the vendor directly manage inventory. Just-in-time management focuses on minimizing inventory levels by coordinating production and delivery closely with demand, not on vendor oversight of inventory. Stock optimization typically involves techniques to determine the best inventory levels and order quantities, but it is not about the vendor managing the inventory. Therefore, Vendor-managed inventory is the approach that aligns with the vendor taking responsibility for managing the customer's inventory according to agreed standards.