ch. 14 marketing
a firm has $2,000,000 in net annual sales, its beginning inventory (for the year) was $400,000 (at retail), and its ending inventory was $600,000 (at retail). the firm's stock turnover rate for the year is ______ times.
4.0
a firm has order-processing costs of $8, an annual demand of 4,00 units, holding costs equal to 20% of the average inventory on hand, and wholesale unit costs of $2. what is its economic order quantity
400 units
a firm's order lead time is 7 days, its usage rate is 5 units per day, and its safety stock is 10 units. its reorder point is ______ units.
45
relationship marketing is typically required for the success of
JIT inventory systems
when a firm seeks to ship out 95% of its orders within five hours of receipt, it is involved with
a distribution standard
an important characteristic of a direct channel of distribution is
a high level of channel control
a central component to relationship marketing is
a long-term relationship among distribution intermediaries
which of these illustrates channel cooperation?
a manufacturer granting a wholesaler credit for all sales in its territory, whether or not initiated by the wholesaler
a firm has heavy seasonal peaks in customer demand during the year. which of these would be the WORST warehousing arrangement?
a private warehouse
which of these illustrates channel conflict?
a retailer making late payments to a vendor
outsourcing is an activity most closely related to
a value delivery chain
high-value, perishable, and emergency goods dominate which transportation form?
airways
medical supplies, flowers, and high-value computer supplies are most likely to utilize which transformation form?
airways
with a contractual channel arrangement,
all the terms regarding distribution tasks, prices, and other factors are clearly specified in writing for each member
a franchise agreement between a Wendy's franchise and the Wendy's franchisor illustrates
an administered arrangement
which type of warehouse allows a firm to delay the payment of taxes until goods are sold?
bonded
a manufacturer's refusal to ship merchandise to a retailer that undercuts competitors' prices is an example of
channel conflict
a slotting allowance, in which retailers require that a manufacturer pay for the use of shelf space for new products, illustrates
channel conflict
the battle of the brands illustrates
channel conflict
which of these is NOT a channel member?
competitors
the assorting element of the sorting process enables
consumer to have a broad selection of products
which method of coordinating transportation facilitates the use of intermodal shipping?
containerization
a major advantage of a direct channel is
control over a firm's entire marketing efforts
which of these is NOT a channel function?
customer contact
which concept is central to a pulling strategy?
derived demand
no independent intermediaries are used in which type of distribution channel?
direct
vertical integration (such as a manufacturer's undertaking retail responsibilities through ownership) is an example of a
direct channel of distribution
a firm can most effectively implement a differentiated market segmentation strategy with which distribution strategy?
dual channel of distribution
the order volume corresponding to the lowest sum of order-processing and inventory-holding costs is known as the
economic order quantity
channel members are able to exchange data via computer hookups through
electronic data interchange (EDI)
JIT inventory systems typically work in conjunction with an
electronic data interchange system
the highest degree of channel control is possible with _____ distribution
exclusive
which carrier is excused from legal restrictions and must only comply with safety rules?
exempt
a dual channel of distribution is best used by firms having a concentrated demand pattern.
false
a firm's beginning inventory is 5,000 units and ending inventory is 8,000 units. if it sells 35,000 units per year, its stock turnover rate in 5 times.
false
a firms needs 7 days for an order to be processed and received, sells 8 items per day, and keeps a safety stock of 10 items. its reorder point should be 87.
false
a manufacturer may have to develop consumer demand through a pushing strategy to encourage intermediaries to stock a new product.
false
administered channel arrangements are typically longer than contractual channel arrangements.
false
as a firm's order size increases, its total order-processing costs increase while its total inventory-holding costs decrease.
false
convenience products are generally distributed through selective distribution.
false
direct channels reduce the number of transactions between a manufacturer and its final consumers.
false
exclusive distribution can be characterized by broad market coverage (wide channels).
false
final consumers are considered to be a distribution intermediary.
false
in a pulling strategy, the various firms in a distribution channel cooperate in the promotional efforts for a product.
false
independent intermediaries are used in a direct channel of distribution.
false
keiretsus represent vertical integration in an international market.
false
manufacturers' desire for brand loyalty and retailers' desire for store loyalty often result in channel cooperation.
false
safety stock requirements are higher in a JIT inventory system than in a traditional inventory system.
false
the flexible scheduling of railroads makes this transportation mode ideal for JIT inventory systems.
false
the more distribution intermediaries that a firm employs, the greater the customer contact it achieves and the greater its control over the marketing mix.
false
the order cycle and order lead time are opposite concepts.
false
the sorting process consists of acquiring a broad range of products to offer the final consumer the convenience of one-stop shopping.
false
the total-cost approach to distribution is often used to justify the use of pipelines as a transportation alternative.
false
the use of rebates, coupons, and other sales promotions aimed at final consumers by a manufacturer illustrate a pushing strategy.
false
to economic order quantity (EOQ) formula attempts to minimize inventory-holding costs.
false
too low an inventory turnover can cause a firm to lose quantity discounts or to be out of stock.
false
which statement concerning waterways is NOT correct?
few new technological developments have affected waterway transportation
which type of warehouse allows a firm to use inventory as collateral for a loan?
field
in a JIT inventory system,
firms order frequently and in lower quantities
a firm has a planned usage rate of 20 units per day, a planned safety stock of 20 units, and an expected order lead tiem of 5 days. if the actual usage rate is 25 units per day, the firm will be out of stock
for one-quarter of a day
which of these is NOT a transportation service company?
freight forwarders
which specialized transportation form receives profits on the basis of the difference between carload (cl) and less than carload (lcl) rates?
freight forwarders
which is the largest discount that a distribution intermediary typically receives?
functional
which of these is an example of a clear distribution standard?
goods damaged in transit should be reduced by half
transportation service companies
handle shipments of small and moderate-sized packages
a major advantage of vertical integration (such as a manufacturer operating a factory outlet store) is that it
increases control over other channel members
a keiretsu is an
integrated network of suppliers, manufacturers, and resellers
convenience products should utilize _____ distribution
intensive
which of the following is a major distribution planning function?
inventory management
in comparison to the distribution channel for final goods, the distribution channel for industrial goods
is more prone to use team selling
what role does assorting perform in the sorting process?
it enables consumers to have a wide choice or products and complementary goods by shopping at one retailer
what impact would a JIT inventory system have on a firm's warehousing strategy?
its use of both private and public warehouses would diminish
channel length refers to the
levels of independent members along a distribution channel
the broad range of activities concerned with efficiently delivering raw materials, parts, semifinished items, and finished products to designated places, at designated times, and in proper condition constitutes
logistics
channel width refers to the
number of independent channel members at any stage of distribution
the period from the date of an order until the date items are ready to sell or use is the
order lead time
which concept is closest to an order cycle?
order lead time
functional discounts reflect deductions from list price for
performing storage, shipping, and other jobs
what type of warehouse is most appropriate for a firm with stable inventory levels throughout the year?
private
the major objective of inventory management is to
provide a continuous flow of goods
which of these is NOT a means by which retailers can develop channel power?
providing high levels of customer service
a manufacturer decides to use final consumer-oriented, rather than trade-oriented promotions. the manufacturer is employing which type of distribution strategy?
pulling
cooperative advertising, in which a manufacturer pays a portion of a wholesaler's or retailer's advertising costs, is an example of which strategy?
pulling strategy
with which distribution approach would a company first seek to generate final consumer demand and then secure dealer support?
pulling strategy
for a manufacturer, the training of a wholesaler's sales personnel, providing of promotional materials, and offering a special sales contest for the wholesaler's sales personnel are important elements in which type of distribution strategy?
pushing
the US transportation form with the largest share of ton miles shipped is
railroads
which statement concerning railroads is correct?
railroads often ship items that are too heavy for motor carriers
which concept is distribution is based upon the concept of long-term relationships, and partnerships between customers and their suppliers?
relationship marketing
a major difference between industrial and consumer product channels of distribution is that an industrial channel is less likely to use
retailers
vertical integration (such as a manufacturer operating a factory outlet store) enables the manufacturer to
shorten its distribution channel
the number of times during a stated period (usually one year) that the average inventory on hand is sold is known as
stock turnover
price policy, conditions of sale, territorial rights, the services/responsibility mix, and contract length and conditions of termination are clearly outlined in
supplier/distribution intermediary contracts
the sorting process enables
the conflicting goals of manufacturers and consumers to be resolved
which statement concerning a value delivery chain is NOT correct?
the consumer is not a part of a value delivery chain
with an administered channel arrangement,
the dominant firm in the distribution process plans the marketing program and itemizes and coordinates each member's duties
which of these are major characteristics of exclusive distribution?
the highest degree of channel control, but limited sales potential
a wholesaler can best protect itself from premature termination from a manufacturer through a contract provision stating
the length of the supplier/distribution intermediary contract
a firm's stock turnover rate is 3 times the industry average. a possible negative consequence of this may be
the loss of quantity discounts
an important characteristic of a JIT inventory system is
the minimization of safety stock requirements
which statement concerning the value chain is NOT correct?
the parties in a value chain typically have common goals
the balance of power has shifted from manufacturers to wholesalers due to
the popularity of private brands
what effect on a company's reorder point would increasing the safety stock from 5 to 15 units have?
the reorder point will increase by 10%
manufacturers often like to produce a limited variety due to specialization. however, final consumers usually desire a wide choice and the ability to purchase complementary goods. these differences are resolved through
the sorting process
the process of service recovery (correcting service quality problems is most closely related to
the total delivered product
a medical equipment manufacturer has decided to use airways due to its being the least costly means to physical distribution. the firm is aware that airways have the highest transportation costs. which concept does this strategy illustrate?
the total-cost approach
the transportation method with the lowest shipping cost may not be selected due to its high inventory-carrying costs. this illustrates
the total-cost approach
which statement concerning motor carriers is NOT correct?
the trucking industry has not yet been deregulated
which statement concerning airways is NOT correct?
the use of airways generally requires the use of regional warehouses
in a pushing strategy,
the various firms in a distribution channel cooperate in marketing a product
a contract provision provides a wholesaler with credit for all sales made in its territory regardless of how the sales were initiated. this provision relates to the territorial rights of the wholesaler.
true
a firm can best appeal to multiple market segments through a dual channel of distribution.
true
a firm seeking to maximize control over its channel strategy should use a direct channel of distribution.
true
a firm with high seasonality should consider the use of private warehouses to supplement its public warehouse strategy.
true
a key factor in relationship marketing is the long-term nature of relationships in distribution.
true
a major limitation of the use of waterways is the limited season for shipment.
true
a product typically moves from exclusive to intensive distribution as it passes from the introduction to the growth stages in the product life cycle.
true
a supplier/distribution intermediary contract covers such factors as pricing, conditions of sale, territorial rights, the services/responsibility mix, contract length, and conditions of termination.
true
a wholesaler uses a reorder point of 70 units. its order lead time is 5 days, it holds no safety stock, and sells an average of 10 units per day. as long as an order is received within 6 days after it is placed, the firm will not run out of stock providing its usage rate is equal to or less than 10 units per day.
true
an activity should not be performed as part of the value chain if it is not considered important by final consumers.
true
an example of an administered channel arrangement is the franchisor-franchisee arrangement.
true
an indirect channel is generally used by companies that desire to minimize their investment in distribution.
true
as contrasted with final consumer products, industrial products are more likely to be marketed through distinct intermediaries that specialize in industrial products.
true
channel width may be reduced through horizontal integration (such as a wholesaler purchasing a competing wholesaler).
true
containerization greatly facilitates the efficiency of intermodal shipping.
true
containerization is generally used by firms that rely on multiple forms of transportation for a shipment.
true
electronic data interchange is an integral part of a JIT inventory system.
true
franchising is a form of channel power for the franchisor.
true
government parcel post, private parcel, and specialized express companies are the three major forms of transportation service companies.
true
indirect channels of distribution are more common in consumer markets than with industrial markets.
true
intermediaries are typically compensated through the use of both functional discounts and commissions.
true
keiretsus can be wither vertical or horizontal.
true
manufacturers and final consumer are considered to be channel members.
true
of the major transportation forms, pipelines carry the narrowest range of products.
true
outsourcing is an important decision in formulating the total delivered product.
true
relationship marketing greatly facilitates the use of JIT inventory systems.
true
stock turnover can be calculated in terms of units or dollars.
true
the concept of a long-term partnership among distribution intermediaries is central to the relationship marketing concept.
true
the important elements of a contractual channel arrangement are specified in a supplier/distribution intermediary contract.
true
the sorting process can be best handled through direct distribution.
true
the total delivered product and the concept of service quality are closely related.
true
the total-cost approach may be used by firms to justify the relatively high cost of air freight.
true
the transportation form with the lowest per-mile cost may have the highest total costs (according to the total-cost approach) because of the slowness of shipments.
true
there are two components to a value chain: the value chain itself and the value delivery chain.
true
to retailers, a JIT inventory system is known as a quick response inventory system.
true
when manufacturers provide point-of-purchase promotional materials, sales contests, and sales training for retail salespersons, they are involved with push marketing.
true
with a dual channel of distribution, a firm can use intensive distribution for some products and exclusive distribution for other products.
true
which of these are major characteristics of intensive distribution?
widespread market coverage and limited channel control