Chapter 11 quiz

Retail chains typically classify each of their stores on the basis of annual sales. According to this classification, _____. A. A stores would have the largest sales volume B. C stores would receive the highest inventory C. B items represent 65 percent of SKUs in a category D. C items contribute to 20 percent of sales E. B items require the highest amount of backup stock

A. A stores would have the largest sales volume

Which of the following statements is NOT true of a potential problem with appointing vendors as category captains? A. Appointing vendors as category captains makes merchandise management tasks difficult for retailers. B. Vendors could take advantage of their position by suggesting an assortment plan that includes most of its SKUs and exclude other SKUs that contribute more so to the retailer's profitability. C. The vendor category captain could collude with the retailer to fix prices. D. The vendor category captain could block other brands from access to shelf space. E. The dependence on the vendor category captain may cause a retailer to miss opportunity for increasing margins through their private-label SKUs.

A. Appointing vendors as category captains makes merchandise management tasks difficult for retailers.

What is the first step in merchandise management planning? A. Developing a forecast for sales B. Executing a merchandise plan C. Developing a business plan D. Determining the appropriate inventory levels E. Penetrating a new market

A. Developing a forecast for sales

Which of the following merchandise systems focuses on staying as close to out of stock as possible? A. Fashion merchandise management system B. Assortment driven management system C. Historical precedence management system D. Staple merchandise management system E. Allocated space management system

A. Fashion merchandise management system

Which of the following statements is true of a merchandise category? A. It is the basic unit of analysis for merchandising decisions. B. It is the smallest unit available for keeping inventory. C. It is the unit of inventory least affected by seasonal trends. D. It is the largest unit available for keeping inventory. E. It is an assortment of complementary SKUs.

A. It is the basic unit of analysis for merchandising decisions

_____ is the amount of time between the recognition that an order needs to be placed and the point at which the merchandise arrives in the store and is ready for sale. A. Lead time B. Order time C. Fill rate D. Service level E. Delivery rate

A. Lead time

Which of the following analysis techniques compares actual and planned sales to determine whether more merchandise is needed to satisfy demand or whether price reductions are required? A. Sell-through analysis B. GMROI C. ABC analysis D. Inventory turnover analysis E. Multiattribute analysis

A. Sell-through analysis

What is the drawback of utilizing category captains? A. The vendor category captain could take advantage of their position and maximize their own sales. B. Retailers tend to ignore recommendations of the category captain. C. Retailers take advantage of the information and misuse it. D. Retailers can take advantage of their position and minimize competing brands. E. Vendor category captains are not in a good position when compared to retailers to manage a category.

A. The vendor category captain could take advantage of their position and maximize their own sales.

After developing a plan for managing merchandise within a category, the next step in the merchandise management process is to: A. allocate the merchandise to the stores. B. make the purchase. C. order through vendors. D. re-evaluate the plan using last year's plan. E. penetrate new markets.

A. allocate the merchandise to the stores

Since sales and the arrival of merchandise from vendors can't be predicted with perfect accuracy, retailers have to carry _____. A. backup stock B. basic merchandise C. perpetual inventory D. cycle stock E. base stock

A. backup stock

_____ refers to inventory for which the level goes up and down in response to the replenishment process. A. Cycle stock B. Backup stock C. Basic stock D. Perpetual inventory E. Order point

A. cycle stock

A(n) _____ is a small group of respondents interviewed by a moderator using a loosely structured format in which participants are encouraged to express their views and comment on the views of others in the group. A. focus group B. ethnic group C. demogroup D. customer advisory council E. online research community

A. focus group

Which of the following is a consequence of a high inventory turnover? A. Improved employee morale B. A decrease in the cost of goods sold C. An increase in promotions and markdowns D. Higher risk of product obsolescence E. A decrease in profits

A. improved employee morale

_____ of a retailer's merchandise is the number of SKUs within a subcategory. A. Merchandise breadth B. Horizontal integration C. Variety D. Assortment E. Merchandise mixture

D. Assortment

A(n) _____ indicates the decision variables set by the buyer, such as product availability, the backup stock needed to provide the product availability, and the order points and quantities. A. inventory management report B. sell-through analysis C. periodic inventory control system D. perpetual inventory control system E. automatic ordering report

A. inventory management report

The retailer's information system determines the _____ by comparing the sales made through the POS terminals with the shipments received by the store. A. perpetual inventory B. order point C. buffer stock D. cycle stock E. fill rate

A. perpetual inventory

Father Christmas is a retail store in Georgia that sells a unique Santa made from fur, wool, and tapestry. If 150 customers wish to buy a Santa from this store, and it sells 120 before running out of stock, what is its service level? A. 15 percent B. 80 percent C. 20 percent D. 85 percent E. 88 percent

B. 80 percent

Which of the following is NOT true of fashion merchandise categories? A. Forecasting the sales for fashion merchandise categories is more challenging than forecasting for staple goods. B. Buyers for fashion merchandise categories have a high degree of flexibility in correcting forecasting errors. C. They have a short life cycle. D. Buyers often do not have a chance to reorder additional merchandise after an initial order is placed. E. New products are continuously being introduced.

B. Buyers for fashion merchandise categories have a high degree of flexibility in correcting forecasting errors

Which of the following persons is a vendor who forms an alliance with a retailer to help gain consumer insight, satisfy customer needs, and improve performance and profit across a category? A. Assortment supervisor B. Category captain C. Category manager D. Category specialist E. Consumer advocate

B. Category captain

Which of the following is true of the forecasting approach for staple merchandise categories? A. Buyers need to find out what customers are going to want in the future. B. Forecasts are typically based on extrapolating historical sales. C. Buyers for these categories rely heavily upon forecast services. D. Buyers for these categories conduct focus group studies to find out consumers' opinions. E. Buyers for these categories depend upon category sales forecasts which vendors provide.

B. Forecasts are typically based on extrapolating historical sales.

Which of the following products is an example of a classification? A. Sweaters B. Infant apparel C. Polo shirts D. Shoes E. Formal shirts

B. Infant apparel

Which of the following factors is considered by retailers in making merchandise allocation and promotion decisions specific to difficult economic times? A. Shrinkage B. Paycheck cycle C. Buffer stock D. Backup stock E. Fill rate

B. Paycheck cycle

_____ is also referred to as the level of support or service level. A. Product assortment B. Product availability C. Product satisfaction D. Product depth E. Product breadth

B. Product availability

Which of the following products is NOT an example of a stock-keeping unit (SKU)? A. Size12,white,full sleeve, Ralph Lauren shirts B. Teen necklaces with matching bracelets and rings C. Queen size Sealy mattress with extra back support and Scotch Guard D. No-ad sunscreen, SPF 50 in 50 ounce squeeze-top dispenser E. V-8 vegetable juice in 32 fluid ounce can

B. Teen necklaces with matching bracelets and rings

A merchandise group of a retailer is managed by a _____. A. divisional merchandise manager (DMM) B. general merchandise manager (GMM) C. buyer D. category captain E. category manager

B. general merchandise manager (GMM)

When there is a high inventory turnover, there is an increase in sales because: A. price points are set higher to accommodate for potential sales loss. B. new merchandise is continually available to customers. C. the merchandise begins to look shopworn. D. sales are increased by reducing prices. E. more money is available to buy new merchandise.

B. new merchandise is continually available to customers

In staple merchandise management systems, the _____ is the amount of inventory below which the quantity available shouldn't go or the item will be out of stock before the next order arrives. A. service level B. order point C. base stock D. perpetual inventory E. average inventory

B. order point

The merchandise budget plan: A. is used to keep track of the actual merchandise flows. B. specifies the level of inventory needed to support the sales. C. compares actual and planned sales to determine whether more merchandise is needed. D. identifies the performance of individual SKUs in the assortment plan. E. uses a weighted-average score for each vendor.

B. specifies the level of inventory needed to support the sales

A(n) _____ is the smallest unit available for inventory control. A. category B. stock-keeping unit C. classification D. merchandise group E. assortment

B. stock-keeping unit

Which of the following statements does NOT describe the approach which deals with cycle (base) stock? A. A retailer tries to reduce the base stock to keep its inventory investment low. B. One approach for reducing the base stock is to reorder and receive merchandise from the vendor more often. C. Frequent orderings with smaller quantities will reduce transportation costs. D. Shorter delivery time from the vendor will reduce the level of base stock. E. Shorter lead time from the vendor will reduce the level of base stock.

C. Frequent orderings with smaller quantities will reduce transportation costs

Which of the following schemes is the correct order describing the levels of the merchandise classification scheme from the highest level to the lowest level? A. Department-Merchandise Group-Classification-Category-stock-keeping unit (SKU) B. Merchandise Group-Classification-Department-Category-SKU C. Merchandise Group-Department-Classification-Category-SKU D. Classification-Department-Category-Merchandise Group-SKU E. Category-Classification-Merchandise Group-Department-SKU

C. Merchandise Group-Department-Classification-Category-SKU

Which of the following is the process by which a retailer attempts to offer the appropriate quantity of the right merchandise, in the right place and at the right time while meeting the company's financial goals? A. Category management B. Quick response inventory management C. Merchandise management D. Inventory control E. Materials procurement and handling

C. Merchandise management

Which of the following statements about assortment is NOT true? A. The number of SKUs offered in a merchandise category is a strategic decision. B. The breadth and depth of the assortment in a merchandise category can affect the retailer's brand image. C. Offering a large assortment normally simplifies a customer's buying decision. D. Customer perceptions on assortments are based on the availability of the customer's favorite SKU and the size of the category's display. E. Buyers need to consider the degree to which categories in a department complement each other.

C. Offering a large assortment normally simplifies a customer's buying decision.

Which of the following statements is NOT true of the merchandise classification scheme? A. A stock-keeping unit (SKU) is the smallest unit available for inventory control. B. In soft goods, a SKU usually means a particular size, color, and style. C. SKUs are the basic units of analysis for making merchandising management decisions. D. The highest classification level is the merchandise group. E. A classification is a group of items targeting the same customer type.

C. SKUs are the basic units of analysis for making merchandising management decisions

Which of the following statements holds true for the purchase of staple merchandise? A. Buyers often do not reorder additional merchandise after placing the first order. B. Buyers for staple merchandise categories have much less flexibility in correcting forecasting errors. C. Staple merchandise is purchased using a continuous replenishment system by monitoring sales and generating replacement orders. D. The staple merchandise buying system requires more experienced buyers. E. The main objective of staple merchandise buying is to be as close to out of stock as possible.

C. Staple merchandise is purchased using a continuous replenishment system by monitoring sales and generating replacement orders.

Which of the following statements does NOT describe the relationship between product availability and stock level? A. The higher the product availability, the greater the amount of backup stock. B. More backup stock is needed in the model stock plan if a retailer wants to increase product availability. C. The quantity of backup stock is fixed by a retailer and is not influenced by product availability. D. If the product availability gets too high, scarce financial resources will be wasted on needless inventory that could be more profitably invested in increasing variety or assortment. E. A very high level of product availability results in a prohibitively high inventory investment.

C. The quantity of backup stock is fixed by a retailer and is not influenced by product availability.

_____ of a merchandise category is the number of different merchandising subcategories offered. A. Merchandise depth B. Classification C. Variety D. Assortment E. Merchandise mixture

C. Variety

Why are vendors in a better position to manage a category than a smaller retailer? A. Retailers manage brands more often than categories. B. Retailers managing merchandise groups have little experience with categories. C. Vendors have superior information through their focus on a specific category. D. Vendors work to manage higher sales within their companies. E. Retailers are traditionally poor category managers.

C. Vendors have superior information through their focus on a specific category.

After developing a plan and allocating the merchandise, the next step in the merchandise planning process involves: A. replenishing the inventory levels. B. planning for the following season. C. analyzing the performance and making adjustments. D. discussing buybacks with the vendors. E. penetration of new markets.

C. analyzing the performance and making adjustments

The second highest level in the merchandise classification structure is the _____. A. stock-keeping unit B. category C. department D. merchandise group E. classification

C. department

The percentage of SKUs received complete on a particular order from a vendor is called the _____. A. product availability B. order rate C. fill rate D. service level E. delivery rate

C. fill rate

A performance measure which assesses a buyer's contribution to ROA is called the _____. A. cost plus pricing B. gross margin C. gross margin return on investment D. net profit E. break-even point

C. gross margin return on investment

Merchandise like men's crew socks, canned peas, college ruled loose leaf paper, and 60-watt light bulbs would be considered _____ that are in continuous demand over an extended time period. A. expected merchandise B. sample merchandise C. staple merchandise D. seasonal merchandise E. fashion merchandise

C. staple merchandise

An open-to-buy system compares: A. a store's perpetual inventory and order point quantity. B. the amount of merchandise in dollars and the sales forecast. C. the planned and actual end-of-month inventory. D. annual sales and backup stock required for merchandise categories. E. the assortment plan and the projected sales volume.

C. the planned and actual end-of-month inventory

Which of the following is NOT true of staple merchandise categories? A. They consist of items which are in continuous demand over an extended time period. B. The number of new product introductions in these categories is limited. C. The demand for these categories is predictable. D. Because their sales are relatively steady from day-to-day, periodic inventory system is used. E. Merchandise planning systems for these categories focus on continuous replenishment.

D. Because their sales are relatively steady from day-to-day, periodic inventory system is used

Which of the following processes is an unstructured form of personal questioning used in market research and involves extensive probing to get individual respondents to talk in detail about a subject? A. Coolhunting B. Crowd manipulation C. Focus group interview D. In-depth interview E. Showrooming

D. In-depth interview

Which of the following terms is defined as the percentage of demand for a particular SKU that is satisfied? A. Assortment B. Economic order quantity C. Merchandise mix D. Product availability E. Variety

D. Product availability

Which of the following statements does NOT describe the trade-offs that buyers should consider for merchandise assortment planning? A. Increasing sales by offering more breadth and depth can potentially reduce inventory turnover. B. Increasing sales by offering more breadth and depth can potentially reduce GMROI by having more stock-keeping units (SKUs). C. Increasing breadth and depth can increase the need to put more merchandise on sale and thus negatively affect the gross margin. D. SKU rationalization programs can help in increasing inventory turnover without reducing sales. E. The more SKUs offered, greater the chance of breaking sizes—running out of a specific size SKU.

D. SKU rationalization programs can help in increasing inventory turnover without reducing sales.

Which of the following merchandise categories is purchased in a manner similar to fashion merchandise? A. Promotional merchandise B. Sample merchandise C. Staple merchandise D. Seasonal merchandise E. Expected merchandise

D. Seasonal merchandise

_____ categories consist of items whose sales fluctuate dramatically depending on the time of year. A. Expected merchandise B. Sample merchandise C. Staple merchandise D. Seasonal merchandise E. General merchandise

D. Seasonal merchandise

Which of the following statements is true of the ABC analysis? A. It compares actual and planned sales to determine the quantity of merchandise needed. B. It uses a weighted-average score for each vendor. C. The A items account for 10 percent of the SKUs and 20 percent of sales. D. The SKUs in a merchandise category are rank-ordered by several performance measures. E. The C items account for 65 percent of SKUs and contribute to 70 percent of sales.

D. The SKUs in a merchandise category are rank-ordered by several performance measures.

A catalog retailer of kitchen items observes that during some weeks it sells 40 muffin pans, and during other weeks it sells none. A reorder takes up to three weeks. The probability of running out of pans and alienating its customers can be alleviated by maintaining _____. A. non-ledgered stock B. cycle stock C. hidden inventory D. backup stock E. lead stock

D. backup stock

A _____ is a group of items targeting the same customer type, such as girls' sizes 4 to 6. A. stock-keeping unit B. department C. merchandise group D. classification E. merchandise category

D. classification

The highest classification level in a buying organization is the _____. A. order point B. buying group C. stock-keeping unit D. merchandise group E. department

D. merchandise group

The _____ is the number of each SKU in the assortment plan that the buyer wants to have available for purchase in each store. A. merchandise budget plan B. order point C. assortment plan D. model stock plan E. stock-to-sales ratio

D. model stock plan

Garden rakes, lawn mowers, and sunscreen would be considered part of a(n) _____ category. A. expected merchandise B. sample merchandise C. staple merchandise D. seasonal merchandise E. fashion merchandise

D. seasonal merchandise

Which of the following is NOT true of category management? A. Managing merchandise within a category by brand can lead to inefficiencies because it fails to consider the interdependencies between SKUs in the category. B. The category management approach to managing breakfast cereals in supermarkets should have one buyer or category manager who oversees all merchandising activities for the entire category. C. A category manager ensures that the store's assortment includes the "best" combination of sizes and vendors. D. A category manager chooses vendors that will get the most profit from the allocated space. E. A category manager is also called a category captain and works with vendors to get the most profit from collaborative relationships.

E. A category manager is also called a category captain and works with vendors to get the most profit from collaborative relationships.

A(n) _____ identifies the performance of individual SKUs in the assortment plan. A. product rating system B. sell-through analysis C. inventory turnover ranking D. GMROI E. ABC analysis

E. ABC analysis

Retailers often find the 80-20 principle evident within the ABC analysis. What does the 80-20 principle imply? A. About 20 percent of a retailer's sales promotion sells 80 percent of its inventory. B. Approximately 20 percent of a retailer's sales come from 80 percent of its products. C. Approximately 80 percent of a retailer's inventory was sold, and 20 percent was wasted. D. 80 percent of the retailer's customers are repeat customers and only 20 percent are new. E. Approximately 80 percent of a retailer's sales come from 20 percent of its products.

E. Approximately 80 percent of a retailer's sales come from 20 percent of its products.

_____ consist of items that are only in demand for a relatively short period of time. A. Expected merchandise categories B. Sample merchandise categories C. Staple merchandise categories D. General merchandise categories E. Fashion merchandise categories

E. Fashion merchandise categories

Which of the following is NOT true of a fashion merchandise category? A. It consists of items which are only in demand for a relatively short period of time. B. New products are continually introduced into these categories. C. The introduction of new products makes the existing products obsolete. D. The change of colors and styles can make the basic product fashion merchandise. E. Forecasting sales for this category is simplistic and predictable.

E. Forecasting sales for this category is simplistic and predictable

Which of the following factors does NOT contribute to the increase of buffer stock levels? A. The high service level that a retailer tries to achieve B. High fluctuations in demand C. Long lead time for delivery from the vendor D. Fluctuations in vendor lead time E. Frequent store deliveries

E. Frequent store deliveries

Which of the following statements is NOT true of a department in the merchandise classification scheme? A. It is the second level in the merchandise classification scheme. B. It is at a lower level than the merchandise group in the merchandise classification scheme. C. It is a level higher than classification in the merchandise classification scheme. D. The DMM, who manages the department, is responsible for several merchandise classifications. E. It is managed by a general merchandise manager (GMM).

E. It is managed by a general merchandise manager (GMM)

Which of the following is NOT a factor that determines the level of required backup stock? A. The product availability the retailers wish to provide B. Fluctuations in demand C. Lead time for delivery from the vendor D. Fluctuations in vendor lead time E. Price of the product

E. Price of the product

Which of the following best describes variety? A. Product availability B. Inventory that results from a replenishment process C. The percentage of demand for a particular SKU that is satisfied D. The number of SKUs in a store E. The number of different merchandising subcategories within a store

E. The number of different merchandising subcategories within a store

Which of the following is an example of staple merchandise? A. The latest style of denim jeans B. Luggage C. Flannel sheets D. Platform shoes E. Men's black socks

E. men's black socks

A _____ is the basic unit of analysis for making merchandise management decisions. A. department B. stock-keeping unit C. classification D. merchandise group E. merchandise category

E. merchandise category

The _____ method for evaluating vendors uses a weighted-average score for each vendor. A. sell-through analysis B. GMROI C. ABC analysis D. inventory turnover analysis E. multiattribute analysis

E. multiattribute analysis

Which of the following is NOT a benefit of a high inventory turnover? A. Continuous availability of new merchandise B. Improved salesperson morale C. Reduced obsolescence risk and markdowns D. New buying opportunities E. Reduced gross margin

E. reduce gross margin

Father Christmas is a retail store in Georgia that sells a unique Santa made from fur, wool, and tapestry. The store does not sell any other product. Therefore, the store has no _____. A. category B. assortment C. medley D. merchandise mixtures E. variety

E. variety

A(n) _____ is used to keep track of the actual merchandise flows—what the present inventory level is, when purchased merchandise is scheduled for delivery, and how much has been sold to customers. A. model stock plan B. fashion-oriented bookkeeping C. open-to-buy system D. order point E. perpetual inventory

c. open-to-buy system

Smart Wash is a popular brand of detergent powder. The stock needs to be continuously replenished in stores and supermarkets due to its high demand. The detergent powder belongs to the category of _____. A. expected merchandise B. sample merchandise C. staple merchandise D. seasonal merchandise E. fashion merchandise

c. staple merchandise