Which of the following describes "consignment inventory"?

Consignment inventory refers to goods that are in the possession of a buyer but remain under the ownership of the supplier until they are used or sold. This means that the buyer does not have to pay for these supplies until they are utilized, aligning perfectly with the description provided in the correct answer. This model is beneficial for hospitals because it allows them to stock necessary supplies without immediate financial commitment, thus aiding in cash flow management.

Understanding the other options provides context on what consignment inventory is not. The first option describes inventory that is already owned by the hospital and stored off-site, which does not accurately capture the essence of consignment because control has transferred to the hospital. The third option refers to excess stock that has already been recognized as a loss, highlighting inventory that is no longer usable or available for production, clearly distinguishable from the nature of consignment where ownership has not transferred. The fourth option talks about temporary loans from vendors, which could suggest a different arrangement where the items are not owned or intended for long-term consumption, unlike consignment inventory, where the supplier retains ownership until the items are used or sold.