Chapter 15
What is the reorder point if the usage rate is 10 units per day, the order lead time is five days, and the safety stock is 30?
80
When channel members are linked by legal agreements that specify each member's rights and responsibilities, _______ exists.
a contractual VMS
Customers who purchase computer laptops from manufacturer websites are acquiring products through
a direct-marketing channel
Kolder Inc. is using a new just-in-time inventory management system that requires ordering smaller quantities of parts more frequently. The success of its business depends significantly on receiving these parts very quickly, so like many other companies using just-in-time, Kolder Inc. is relying more on the ______ mode of transportation despite its expense.
airway
If a microchip in a computer in New York failed, which method of transportation would be most appropriate to use to replace the chip immediately if one could get the new chip only from Silicon Valley, California?
airways
A public warehouse is a
business that leases storage space and related facilities for distribution to other firms.
Nike maintains a good deal of control over how its products are promoted, displayed, and sold. Because of this control, Nike would be appropriately described as the channel
captain
A single leader who controls and organizes a marketing channel is called a
channel captain
If a wholesaler continually emphasizes and promotes one company's products over a competing company's products, _____ is likely to result.
channel conflict
The main objective of physical distribution should be to
decrease costs while increasing service.
Caruthers Paint Manufacturing Company buys the chemicals it needs for producing its products from a chemical producer, Roth Chemicals. In this instance, the chemicals are being distributed to Caruthers through which of the following types of channels?
direct distribution
Garcia Wholesale Plumbing has seen its sales in the Southeast triple in the past two years. Materials handling director Barb Peterson announces plans to the board for an Atlanta facility that will combine shipments received from Garcia's 25 suppliers for nearly immediate shipment to plumbing stores and contractors in the region. This new facility would be best classified as which of the following?
distribution center
Expensive, high-quality products that are purchased infrequently often reach consumers through
exclusive distribution
The three major levels of intensity at which a company can choose to distribute its products are _____ distribution.
exclusive, selective, and intensive
If Ralston Purina forced Kroger's grocery chain to place all of its products in the stores' most favorable locations, it would be
exercising channel power
Organizational buyers are especially partial to direct marketing channels when
expensive and/or complex equipment is involved.
Which of the following organizations consolidates shipments from several firms into more efficient lot sizes?
freight forwarder
At the annual managers' planning conference, Jackie Conrad asks the other managers to consider her proposal to increase the quantity of inventory to a five-week supply in order to increase the percentage of completely filled customer orders from 85 percent to 90 percent. She states that she is willing to trade off the ___________ incurred for the positive effect of better customer service.
higher warehousing costs
To expand the number of its retail outlets in the Washington, D.C., area, the Dress Barn bought out a small chain of women's apparel stores in northern Virginia. This type of integration is called
horizontal
An independent business that takes title to products and carries inventories is a(n)
industrial distributor
If Nokia decides to make changes in its marketing channels, the strategic significance is that channel decisions are
long-term commitments
The result of an inventory stockout is usually an increase in
lost sales
An independent businessperson who is paid a commission to sell complementary products of different producers in an assigned territory without actually taking title of the merchandise is a(n)
manufacturers' agent
A group of organizations and individuals that directs the flow of products from producers to the ultimate consumers is called a
marketing channel
What links producers to consumers through the purchase and reselling of products or contractual agreements?
marketing intermediaries
When considering the best channel to use, all of the following are true with regard to larger firms except they
may be better suited to serve customers in a particular region.
Large retailers such as J.C. Penney's and Target are most likely to participate in which of the following channels?
producer, retailers, consumers
Steelcase, Inc. markets furniture directly to businesses. This is an example of a(n) _________ channel.
producer-to-business buyer
Few supermarkets would try to replace a national brand of baby food with their own brand. Assuming that this is true, we have a good example of channel leadership by
producers
What is the primary determinant in deciding how materials will be handled?
product characteristics
Which of the following is least likely to be a factor affecting the selection of marketing channels?
product packaging
Which mode of transportation hauls more freight than any other?
railroads
In an administered VMS, informal coordination brings about a high level of interorganizational management. Nonetheless,
the channel members remain autonomous.
Possession utility is best described as
the customer having access to the product to use now or store and use later.
The notion of physical distribution is
the movement of products from producers to end users
Order processing is defined as
the receipt and transmission of sales order information.
Magnetic Springs wants to ship its bottled water with the most flexible schedules and routes of all transportation modes. Magnetic Springs should use ___________ as its transportation mode.
trucks
Which major mode of freight transportation provides the most flexible schedules and routes?
trucks
In a simple economy of five producers and five consumers, there would be ___________ transactions possible without an intermediary and _________ transactions possible with one intermediary.
twenty-five; ten
If an intermediary wants to carry Tide detergent and Procter & Gamble agrees only if the supplier purchases P&G's entire line of detergents as well, the company is engaging in which of the following channel management practices?
tying agreement
Federal Mogul places several boxes of products or materials on pallets in order to load them efficiently using forklifts. This system of materials handling is called
unit loading
Johnson Controls hires a consultant to assess its materials handling procedures. The consultant recommends the implementation of ___________ if they want easier movement of items between internal destinations in the warehouse.
unit loading
The best way to reduce overall distribution costs is to
use a total-cost approach to analyze and evaluate the entire system.
According to the text, physical distribution cost tradeoffs enable firms to
utilize resources for greatest cost-effectiveness.
Bennetton, a leading manufacturer of knitwear in Italy, expanded its operations to include retail outlets in the United States and South America. This type of integration is called
vertical
Warner Bros. sells cookie jars, puzzles, photo albums, and other items featuring its popular cartoon characters directly through its own retail outlets. This is an example of
vertical channel integration
When Benetton, the Italian sportswear designer and manufacturer, decided to open its own specialty shops to sell its merchandise, the firm was engaging in
vertical channel integration
What function of physical distribution enables companies to compensate for dissimilar production and consumption rates and stabilize prices and availability of seasonal items?
warehousing
Which of the following physical distribution functions involves design and operation of facilities for storing goods?
warehousing
What is a primary difference between an industrial distributor and a manufacturers' agent?
A manufacturers' agent does not acquire title nor usually take possession of the products whereas an industrial distributor does.
In which of the following situations is dual distribution likely to be determined illegal?
A producer uses company outlets to dominate independent retailers that carry its products.
Select the greatest advantage of horizontal channel integration.
Efficiencies in advertising, marketing research, and purchasing are increased.
Honey Farms is a maker of fine chocolates. The company's latest product, Fudge-Dipped Strawberries, is the premier product in its Fudge-Dipped line. The product is very expensive and targeted to upscale consumers. Which form of distribution would Honey Farms be likely to use for its new product?
Exclusive
What are the three primary tasks of order processing?
Order handling, order entry, order delivery
Product and target market characteristics usually determine the type of coverage a product receives. For which of the following products is selective distribution most appropriate?
Panasonic stereos
Which of the following is the most commonly used channel for distributing business products?
Producer, organizational buyers
Manufacturers of convenience products such as chewing gum reach customers through thousands of retailers. What marketing channel are these manufacturers most likely to use?
Producer, wholesaler, retailer, consumer
Nationally distributed consumer convenience products are most likely distributed through which of the following channels?
Producer, wholesalers, retailers, consumers
For which of the following products would exclusive distribution be most appropriate?
Rolls Royce automobile
Which of the following describes a disadvantage of using industrial distributors?
They are unlikely to handle bulky items or items that are slow sellers.
Which of the following is an advantage of using an industrial distributor?
They help reduce a producer's financial burdens by extending credit to customers.
A channel that includes both a manufacturers' agent and an industrial distributor is appropriate under which of the following circumstances?
When the marketer wishes to enter a new geographic market but does not wish to expand the existing sales force
Starbucks has an agreement with Pepsi Co. through which Pepsi distributes Starbucks' coffee drink, Frappucino, to grocery stores and other retail outlets. This is an example of
a strategic channel alliance
When a single channel member manages an integrated marketing channel to achieve low-cost, efficient distribution for satisfying target markets, ______ exists.
a vertical marketing system
In an administered vertical marketing system (VMS), interorganizational relationships are
achieved by informal coordination
Rob Stevens is the head of a company that produces computer software for production scheduling. The firm is small and presently does not generate enough volume to justify hiring a sales force. The firm is probably using ___________ to maintain contact with the firms using its products.
agents
A producer is not likely to receive _____ from an industrial distributor.
aggressive promotion of its brand
The supply chain includes
all entities that facilitate product distribution.
The marketing channel of producer to retailer to consumer is most likely to be used by producers of which of the following products?
automobiles
Marketing channel members are likely to experience misunderstandings, frustration, and poorly coordinated strategies as a result of
channel conflict caused by inefficient communication between channel members.
When one company in a marketing channel has the ability to influence another member's goal achievement, the company has
channel power
Goodyear allows companies like Sears and Discount Tire to distribute and discount its tires. This action significantly increases the possibility of channel ___________ with independent Goodyear dealers.
conflict
When produce companies such as Dole Tomatoes bypass wholesalers and sell directly to retailers, it is likely to create channel ___________ between Dole and these wholesalers.
conflict
Fansteel manufactures parts used in jet engines, which it sells to companies such as Boeing. When shipping products to Boeing, Fansteel seals the parts in 8' × 8' × 40' boxes for shipping to decrease loss and damage. This method of materials handling is
containerization
Piggyback, fishyback, and birdyback are terms usually associated with gaining efficiency in shipping through
containerization
In the distribution channel for Domino's Pizza, channel members are linked by legal agreements that spell out the obligations and rights of each member. This is an example of a(n) ___________ vertical marketing system.
contractual
The Wicks 'N Sticks candle and gift marketing organization has a(n) ___________ vertical marketing system arrangement with its franchised retail store operations.
contractual
The Home Depot is trying to reduce transportation, information management, and administrative costs. To accomplish this goal, channel members need to
cooperate and accommodate one another's needs.
Overall channel goals and individual channel member goals cannot be achieved together without
cooperation
The Limited, which produces and retails clothing products in a coordinated channel, is an example of a(n)
corporate vertical marketing system
Order handling involves all of the following activities except that the
customer places a purchase order
All members of the supply chain should determine their position in the chain, identify their partners and their roles, and establish partnerships whose focus is
customer relationships
The driving force behind marketing channel decisions should be
customer satisfaction
Where do supply chains start?
customers
A goal of physical distribution is to reduce ______ or how long it takes to complete a process.
cycle time
An important goal of physical distribution is reducing the time it takes to complete
cycle time
The United States Postal Service works hard to get priority mail from the sender to the recipient as quickly as possible in order to compete with companies such as UPS and FedEx. The postal service works to reduce
cycle time
Select Comfort, a producer of adjustable air mattresses, sells most of its products through direct mail sales and Internet sales. This channel would be classified as
direct-marketing
Many producers selling on the Internet are using
direct-marketing channels
A channel of distribution is defined as a group of individuals and organizations that
directs the flow of products from producers to customers.
Dual distribution is characterized as
distribution of one manufacturer's product through two or more different channel structures.
Del Monte markets ketchup for household use to supermarkets through grocery wholesalers. It markets ketchup for institutional use through industrial distributors and food brokers. Del Monte is using
dual distribution
Gateway Computer makes computers available through its own stores, its toll-free telephone line, and a website. This is an example of
dual distribution
Many companies use more than one marketing channel to distribute their products to the same target market, a tactic called
dual distribution
Ralph Lauren sells Polo products through department stores as well as in its own specialty shops. The designer uses ___________ as a channel strategy.
dual distribution
A commonly used computerized means of integrating order processing with production, inventory, accounting, and transportation is
electronic data interchange
An arrangement where a producer forbids an intermediary to carry products made by competing manufacturers is called
exclusive dealing
Dell Computers is a nationally recognized manufacturer of computers for the small business and home markets. If Dell were to order one of its wholesalers not to carry any computer products other than those made by Dell, this arrangement would be called
exclusive dealing
If Anheuser-Busch refused to allow Jackson Distributing to carry its product if the distributor also carried Miller Brewing products, the company would have been engaging in which of the following channel management practices?
exclusive dealing
Justin Abercrombie attends a seminar on just-in-time inventory management. Excited about the idea, he returns to his office at Atlanta Auto Supply to start designing such an inventory system. Which of the following steps must Justin take as he institutes this change?
increase order frequency
Jeff Wood's company buys machine tools from large producers and sells them to several Midwestern manufacturing companies. The company Jeff works for carries inventories of the tools, which reduces capital requirements for the producers. Jeff's company is an example of a(n) ___________ in a distribution channel.
industrial distributor
Producers of convenience products such as soft drinks, toothpaste, and breath mints are most likely to use _____ distribution.
intensive
Sales are most likely to have a direct relationship to product availability for products that use _____ distribution.
intensive
When Busch Light Beer was introduced as part of the Anheuser-Busch product line, the company most likely used ___________ distribution.
intensive
Candy bars and chewing gum are most likely to be distributed through _____ and _____.
intensive; dual distribution
___________ is the combining and coordinating of two or more modes of transportation to take advantage of benefits offered by each of the different types of carriers.
intermodal transportation
Because of the significant investment many companies have in the products they sell to customers, they must develop and maintain adequate varieties of products to meet their customers' needs. This is called
inventory management
Greg Braddock is a physical distribution manager. He is currently developing and maintaining assortments of products that are adequate for customer demand. In which stage in the physical distribution system is Greg currently involved?
inventory management
Vertical channel integration
is made possible by purchasing the operations of a link in the channel.
A manufacturer has decided to improve its inventory management by maintaining low inventory levels and waiting to purchase materials until right before they are needed in production. This inventory management technique is called
just-in-time (JIT)
Because Coke is such a popular product and the company is so powerful, Coca-Cola is in a position to exert considerable control over channel structures and the way Coke is marketed. This is an illustration of channel ___________ in the distribution channel.
leadership
Most marketing channels have marketing intermediaries. A marketing intermediary's role is to
link producers to other middlemen or consumers
Managers and consultants at Colgate-Palmolive are meeting to discuss better ways to package its products to reduce damage and make loading more efficient. The primary function they are trying to improve is
materials handling
Freight transportation companies that offer several different shipment methods are called
megacarriers
Eliminating a wholesaler from a marketing channel will
not eliminate the functions performed by that wholesaler.
Nathan is trying to decide which shipping company to use to transport his custom-made furniture to customers. Nathan is facing a decision about
order delivery
By receiving orders online instead of through a paper-based ordering system, Barnes and Nobles has been able to save time and money on
order entry.
The order-processing task that involves verifying product availability, checking prices and customer credit ratings, and filling orders is
order handling
As her Internet quilt and bed linen business grew, Danielle could no longer perform all the distribution activities, so she hired a shipper and an information technology firm to assist with these functions. Danielle is using _____ for physical distribution for her business.
outsourcing
If a firm decides to contract its physical distribution functions to third parties that have no managerial authority within the marketing channel, it is using
outsourcing
The contracting of physical distribution tasks to third parties who do not have managerial authority within the marketing channel is known as
outsourcing
Order processing, inventory management, materials handling, warehousing, and transportation are the activities that define
physical distribution
Assuming everything else equal, the most cost-efficient way for British Petroleum to transport crude oil from remote oil drilling sites in central Alaska to shipping terminals on the Alaskan coast would be
pipelines
Marketing channels create three types of utility for consumers including
place, time, and possession.
Morgan Steel Company leases a warehouse in Jacksonville, Alabama to serve Deep South markets that were large enough and stable enough to make a long-term commitment to fixed facilities. This is a
private warehouse
When companies operate their own facilities for storing and shipping products, these facilities are known as
private warehouses
Consumers receive the benefits of place utility when
products are available in locations where consumers want to buy them.
Without wholesalers and other intermediaries,
products would likely be more expensive due to the use of less efficient channel members.
Air-Tech management learns that last month's production run of heaters at its Newark plant is defective and announces a recall of the specific models produced. To handle the large number of products it expects to receive for replacement of the defective thermostats, Air-Tech will probably need to add a ___________ to its distribution network.
public warehouse
What two modes of transportation are used when containers are shipped by piggyback?
railroads & trucks
Using a freight forwarder usually
reduces transit time
After direct-marketing, the next slightly longer marketing channel adds a(n)
retailer
When Sophie buys organic produce for her household using a channel with only one intermediary, that intermediary is classified as a
retailer
Eric is concerned about not having enough air conditioning units in inventory during June, July, and August so he keeps extra inventory to guard against stockouts during this critical period. Eric is keeping
safety stock
All of the following are concepts used in a just-in-time inventory management system except
safety stock is kept to reduce stockouts
Which of the following is most likely to be a product stocked by an industrial distributor?
screws
In marketing a new line of nursery furniture for infants and small children, the Fisher Company will most likely use ___________ distribution for the products.
selective
Durable goods such as television sets and DVD players generally reach their target markets through
selective distribution
Using only some of the available outlets to distribute a product is called
selective distribution
Fragile products that require special handling are more likely to be distributed through
shorter channels
When three buyers purchase the products of three producers, nine transactions are required. If one intermediary serves both producers and buyers, the number of possible transactions is
six
Anna Wren, sales manager for Pacific Lumber, tells Jason Peoples, the firm's inventory manager, that the firm's failure to have adequate supplies of pressure-treated lumber on hand has cost the firm $175,000 in lost sales. This figure represents which of the following inventory management costs?
stockout
Tying agreements occur when a
supplier furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well.
Long-term partnerships among channel members working together to reduce inefficiencies, costs, and redundancies in the entire marketing channel is called
supply chain management
Wal-Mart is working with its suppliers, using tools such as electronic billing, purchase order verification, and bar code technology, to integrate data used to improve overall performance. This is an example of
supply chain management
Channel decisions are important to marketers mostly because
they involve long-term commitments and affect customer accessibility
Physical distribution activities may be performed by a producer, wholesaler, retailer or
they may be outsourced
The main reason a manufacturer will prohibit intermediaries from selling its products outside designated sales territories is to
tighten its control over distribution of its products.
The reasons a vertically integrated channel can be more effective against competition is because of all of the following except
tightly controlled and bureaucratic management style.
Having products available when the customer wants them is called
time utility
What is the most expensive physical distribution function?
transportation
___________ adds time and place utility to a product by moving it from where it is made to where it is purchased and used.
transportation
The Diamond Salt Company needs to transport 20 tons of salt from Baton Rouge, Louisiana, to Cincinnati. Which of the following methods would be the cheapest for transporting this cargo?
waterways
