MRKT 409: Chapter 14 Practice Questions

What is the reorder point if the usage rate is 20 units per day, the order lead time is eight days, and the safety stock is 60?

The reorder point (Order lead time × Usage rate) + Safety stock 220

Companies have been using computer technology to integrate order processing with production, inventory, accounting, and transportation in a system referred to as

electronic data interchange An electronic data interchange (EDI) is a computerized means of integrating order processing with production, inventory, accounting, and transportation.

If a small retailer is in a marketing channel that contains only the producer, the retailer, and the customer, which of the following is most likely being sold by the retailer?

The small retailer is most likely a college bookstore selling new college textbooks. The potato chips, shoes, and power tools most likely were bought through a wholesaler or other intermediary.

Which of the following describes an advantage of using industrial distributors?

They can perform needed selling activities in local markets at a relatively low cost.

Richland Technologies produces smartphone accessories. In order to have enough capital to manufacture its latest batch of accessories, Richland Technologies secured a loan with its inventory as collateral. Instead of moving the collateral to a warehouse, the bank making the loan hired a company to set up a _____ to provide security over the collateral at Richland Technologies' facility.

This is a FIELD PUBLIC WAREHOUSE. Many public warehouses furnish security for products used as collateral for a loan. A field public warehouse is established by the public warehouse at the owner's inventory location. In this example, the field public warehouse was established at Richland Technologies' facility to protect the inventory used as collateral.

When the Quaker Oats Company manufactures its Quaker Chewy Bars, it places several boxes of the bars into larger shipping boxes that are then stacked onto pallets. These pallets can then be easily moved around using forklifts in a process called

UNIT LOADING is the process of putting one or more boxes on a pallet or skid that can then be loaded efficiently using mechanical means such as forklifts, trucks, or conveyer systems.

After appearing on a national talk show to discuss her line of bracelets and rings, Natalie expected sales volume to increase. Unfortunately, the sales volume was higher than expected and her company had $250,000 in lost sales because it did not have enough inventory. The $250,000 represents which of the following inventory management costs?

When too few products are carried in inventory, the result is a shortage of products referred to as a STOCKOUT. Stockouts can result in customer dissatisfaction that leads to lower sales, and even loss of customers and brand switching.

Customers receive the benefits of form utility from an intermediary when

a retailer offers to add a monogram to a product. Form utility from an intermediary is when the intermediary assembles, prepares, or otherwise refines the product to suit individual consumer needs. The retailer offering to add a monogram is an example of an intermediary providing form utility. Having the product preassembled in the manufacturer's packaging is form utility, but NOT PROVIDED BY INTERMEDIARY

Sony Pictures Television, the production company behind the television show Breaking Bad, made several marketing mix decisions that were related to distribution. All of the following are distribution decisions, except

leasing a billboard in Times Square to feature the star of the show ( a promo decision)

For which of the following products is exclusive distribution most appropriate?

luxury cars

Dan is the president of a small firm that builds office furniture. His company is still fairly small and has not hired a sales staff yet. Dan's firm likely is using _____ to maintain contact with the companies that buy its furniture.

agents Agents may be an economical alternative to a firm that does not have the resources to hire its own sales staff.

grocery store that sells both Annie's Homegrown Organic Macaroni & Cheese and Horizon Organic Macaroni & Cheese has been giving Annie's products better locations on the shelves and promoting them more in stores than Horizon's products. If this continues, _____ is likely to result.

channel conflict One reason that channel conflict may arise is if an intermediary such as a retailer overemphasizes one brand over another. In this case, the grocery store is emphasizing Annie's products more than Horizon's products.

Snap-on Tools uses a franchise model to sell shop equipment products to customers. When Snap-on opened an online Web site that sold tools directly to consumers, this likely caused _____ with franchisees, which would likely increase if Snap-on reaches an agreement to sell through Home Depot as well.

channel conflict hannel conflict occurs when members of a channel disagree about the distribution of a product. Conflict can arise when a firm opens a direct online channel to customers, bypassing existing intermediaries. Conflict can also arise for a producer that has traditionally used a franchise model broadens its retailer base to include other retail outlets.

Fiat Chrysler has an agreement with GAC Group, a Chinese automobile manufacturer, to produce Jeeps in China to be sold to Chinese customers. This agreement gives Fiat Chrysler access to the Chinese market without having to pay import tariffs on cars produced in the United States and sold in China. This is an example of

his is an example of a STRATEGIC CHANNEL ALLIANCE The agreement gives Fiat access to GAC's distribution network in China and allows the cars to be sold in China at a lower price due to the reduced import tariffs.

In-N-Out Burger is a fast-food hamburger chain headquartered in California that owns and operates every location, resisting franchising any new locations. By owning every location and not franchising, In-N-Out operates a(n) _____ and has no plans of adopting a(n) _____.

A CORPORATE VMS is when the distribution channel is entirely owned by a single company, which is In-N-Out's distribution policy. By not opening any franchise locations, In-N-Out is not a contractual VMS, in which legal agreements spell out each member's rights and responsibilities.

A channel that includes both a manufacturers' agent and an industrial distributor is appropriate under which of the following circumstances?

A channel with both a manufacturers' agent and an industrial distributor is appropriate when the manufacturer wants to cover a large geographic area. This may be the case if the company cannot afford a sales force or if the product sold is very seasonal.

If a retailer is reviewing its inventory and notices that the usage rate for one of the products it stocks has decreased, the retailer should

decrease its reorder point

Rosie and John both are buying textbooks for the class. Rosie prefers the online option and purchases her copy of the textbook from the publisher's Web site. John likes the feel of the book in his hands and buys a print copy from his college bookstore. Rosie is purchasing her book through_____, while John is purchasing his through _____.

direct marketing channel; RETAILER

Gap allows shoppers to buy its clothing through its stores or through its Web site gap.com. This is an example of

dual distribution

The Gap sells its clothing through its company-owned stores and through its own Web site. The Gap uses _____ as a channel strategy.

dual distribution

When dealing with large grocery stores, Nestle sells its Gerber baby foods directly to retailers. For smaller grocery stores, however, Gerber baby food is sold to wholesalers who in turn sell it to the stores. Nestle is using

dual distribution Dual distribution occurs when a firm uses two or more marketing channels to distribute the same products to the same target market.

General Electric sells its home appliances through a network of dealers and only a few large retailers. It most likely distributes using _____ distribution.

By only distributing through dealer networks and only a few large retailers, General Electric is using SELECTIVE DISTRIBUTION. Selective distribution means using only some of the available outlets to distribute a product in an area.

Grainger is an industrial supply company selling equipment from manufacturers and selling the equipment to manufacturing companies. Grainger takes title and carries inventory of the products it sells. Grainger is an example of a(n) _______.

By selling equipment to other companies while taking title and carrying inventory, Grainger is an INDUSTRIAL DISTRIBUTOR

The Mini Roadster is manufactured in England. For cars sold in the United States, they are placed into large boxes that are 8-feet wide, 8-feet high, and 10- to 40-feet long. This way, they can be stacked and shipped on ships and barges across the Atlantic Ocean. This process is referred to as

CONTAINERIZATION is the consolidation of many items into a single, large container that is sealed at its point of origin and opened at its destination. The containers are uniform in size so that they can be stacked and shipped via train, barge, or ship. Once they arrive at their destination, they can have wheel assemblies added to be transported by truck.

Old Navy sells its clothing directly to consumers through its own retail outlets. This is an example of a(n) ______

CORPORATE VMS Vertical channel integration is when two or more stages of the marketing channel are combined under one management. One type of vertical channel integration is the corporate vertical marketing system in which all levels of distribution, from manufacturers to retailers, are under a single owner..

Jackie works for a custom bicycle manufacturer and is analyzing the order fulfillment process. She wants to shorten the time between receiving an order online and having the order picked up by UPS while maintaining customer service and cost. Jackie is focusing on improving her company's _____ as a way of increasing customer satisfaction.

CYCLE TIME is the time needed to complete a process. For Jackie, the process she is examining is the order fulfillment process from receiving an order to shipping the finished bicycle.

Carly works at Kellogg's and is on a team developing a new breakfast cereal. She is currently trying to contact different companies who can provide the specific ingredients and equipment needed to make the cereal. She will work with the procurement department to reach an agreement with the companies selected to provide the ingredients and equipment. She is currently engaging in _____ management.

Carly is engaging in SUPPLY MANAGMENT. In its broadest form, supply management refers to the processes that enable the progress of value from raw material to final customer and back to redesign and final disposition. This includes functions like purchasing, procurement, and sourcing.

When Coke Zero was added to the line of Coca-Cola products, it most likely was introduced using _____ distribution.

Coke Zero was most likely introduced using intensive distribution. INTENSIVE DISTRIBUTION is done using all available outlets to distribute a product

JD's Diner offers Coca-Cola products to its customers. They have an agreement with Coca-Cola that they are not allowed to carry products from PepsiCo or any other competitor. Coca-Cola is engaging in which of the following channel management practices?

EXCLUSIVE DEALING Coca-Cola is engaging in exclusive dealing. Exclusive dealing is a situation in which a manufacturer forbids an intermediary from carrying products of competing manufacturers. Here, Coca-Cola is forbidding JD's Diner from carrying PepsiCo products.

Pnina Tornai is a wedding dress designer targeting upscale brides. Her wedding dresses have been worn by celebrities and featured in television programs. Which form of distribution would Pnina Tornai most likely use for her wedding gowns?

EXCLUSIVE DISTRIBUTION is using only a single outlet in a fairly large geographic area to distribute a product. Pnina Tornai uses exclusive distribution, with her high-quality dresses only available in one location in the United States.

Which of the following statements about RESTRICTED SALES TERRITORIES

Exclusive territories do not restrict the amount of competing products available in an area. If that were the case, they would be deemed illegal by the courts. Exclusive territories allow tighter control over distribution, are often favored by intermediaries, may promote competition among dealers with different brand, and must be evaluated in each individual case.

firm that consolidates shipments from many smaller firms into efficient lot sizes is known as a

FREIGHT FORWARDERS consolidate shipments from many smaller firms into efficient lot sizes. They are able to get the smaller firms better rates on shipping since the shipments will be combined with those of other firms. Freight forwarders may even reduce delivery time and the likelihood of damage

Horizontal channel integration

HORIZONTAL CHANNEL INTEGRATION is when organizations at the same level of operation are combined under one management. This can be done by merging two organizations at the same level in the marketing channel such as retailers.

JanSport offers a line of backpacks in a variety of styles and sizes. The company needs to make sure that it has an adequate assortment of backpacks available to meet customer demand as part of the ____ stage of physical distribution.

Having an adequate assortment of backpacks available to meet customer needs is part of INVENTORY MANAGEMENT. Companies need to make sure they do not have either a shortage of products or excess of products.

When Disney merged with Pixar, the merger gave Disney the ability to produce animated films more efficiently. This is an example of

In the movie industry, Disney and Pixar were at similar levels of the distribution network. The merger allowed Disney to integrate horizontally.

For which of the following products is selective distribution most appropriate?

Keruig coffee makers

Product managers for Green Giant are meeting to discuss ways so that they can improve the packaging of their frozen foods to reduce damage and make loading and transportation more efficient. This is an attempt to improve

MATERIALS HANDLING is the physical handling of tangible goods, supplies, and resources. Packaging goods correctly can help prevent damage or breakage during handling and transportation and make loading and transportation more efficient.

Freight transportation companies that have the ability to transport products in many different ways including ships, rails, trucks, and air service are known as

MEGACARRIER

Jeep wants to transport new vehicles from its plant in Toledo, Ohio, to the dealers in Southern California. Which of the following methods would be the cheapest for transporting this cargo?

Of the viable routes from Toledo to Southern California, railroads provide the cheapest mode of transportation. Birdyback would involve using airplanes and trucks to transport the cars.

Using horizontal channel integration allows a firm to

One of the main benefits of merging under a horizontal marketing system is that the new company should enjoy increased efficiency and economies of scale in its marketing mix.

Precision Equipment is updating the way it ships its products. Specifically, it is improving _____ by adding electronic ordering to its system, adding automated machines to move items in the warehouse, and partnering with UPS to ensure priority shipping with the carrier.

Precision Equipment is improving its ORDER PROCESSING SYSTEMS, which includes three main tasks: ORDER ENTRY, ORDER HANDLING, ORDER DELIVERY Electronic ordering improves the order entry process, the machines improve order handling, and the partnership with UPS improves order delivery.

WalMart has begun requiring that its suppliers add _____ to their shipments. The shipments can then be tracked using radio waves to help WalMart and its suppliers make the supply chain more efficient.

RFID tags

Which of the following describes a disadvantage of using an industrial distributor?

Since they are independent firms, they may be difficult to control.

The Internet may increase resentment between intermediaries and manufacturers because

The Internet may increase resentment between intermediaries and manufacturers because it allows manufacturers to create a direct channel that competes with retailers. A manufacturer's online presence creates a capability for direct sales to consumers that did not exist previously.

The primary difference between a manufacturers' agent and an industrial distributor is that

The main difference between an agent and a distributor is that an agent does not take title of a product, but a distributor does. Both are independent and neither is employed by the producer.

Brandon works for Redwood Enterprises in Washington State. As the furniture company expands beyond the Pacific Northwest, Brandon has been asked to find a warehouse to lease in California to serve the company's new markets. This warehouse will be a _____ and will only store furniture manufactured by Redwood Enterprises to be distributed in California and the Southwestern United States.

private warehouse A private warehouse is a company-operated facility that is designed for storing and shipping products. A private warehouse is a company-owned facility for storing and shipping products. It is useful for firms that require special handling and storage and want control of the design and operation of the warehouse.

Caterpillar manufactures bulldozers and other large construction equipment that it sells directly to construction companies. This is an example of a _____ channel.

producer - buyer

Kraft sells its macaroni and cheese through thousands of retailers across the country. Which of the following marketing channel structures is Kraft most likely to use?

producer, wholesaler, retailer, consumer Because of the complexities in dealing with thousands of retailers, Kraft is most likely to use wholesalers to interact with retailers.

Halloween Center is a specialty costume store that operates a retail location from late August through early November. The company needs some warehouse space to store its costumes. Because of the seasonality of its operations, they are most likely looking to lease a

public warehouse

When manufacturers such as Microsoft, Sony, and Bose bypass retailers by opening up their own retail locations, it is likely to

result in channel conflict between the manufacturers and the retailers. This is because the manufacturer's retail location is a new direct competitor to the existing independent retail locations.

Laurie bought herself a new jacket using a marketing channel that has only one intermediary. That intermediary is classified as a

retailer

Gucci sells its handbags through its company-owned stores and through a handful of high-end department store chains like Neiman Marcus and Saks Fifth Avenue. Gucci is using _____ and _____ distribution.

selective; dual

*Marketing channels create four types of utility for consumers. These are*

time, place, possession and form.

When launching its Dove Men+Care line of men's skin care products, Unilever told its distributors that they had to carry the new line if they still wanted to carry the rest of the Dove line of products. They would have been engaging in which of the following channel management practices?

tying agreements This would be a tying agreement in which the manufacturer furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well. In this case, the distributors must purchase the Men+Care products if they wanted to carry Dove.