In VMI with stockout-cost sharing, the VMI contract specifies a stockout penalty per unit backordered per unit time, which is paid by the supplier to the customer whenever stockouts occur at the customer. The VMI contract also specifies that the inventory at the customer is owned by the supplier until it is used by the customer (i.e.,consignmentstock). VMI with fixed transfer payments and stockout-cost sharing is the same as VMI with stockout-cost sharing, except that the VMI contract also specifies a per-period fixed transfer payment between the two firms.