81. When Coach, the producer of fine leather handbags and accessories, decided to open its own specialty shops to sell
its merchandise, and its own retail outlet stores, the firm was engaging in:
a. multiple channel repetition.
b. vertical channel integration.
c. dual channel integration.
d. horizontal channel integration.
e. channel expansion.
82. The Limited, which produces and retails clothing products in a coordinated channel, is an example of a(n):
a. administered vertical marketing system.
b. conventional marketing channel.
c. channel network.
d. contractual marketing channel.
e. corporate vertical marketing system.
Chapter 13 – Marketing Channels and Supply-Chain Management
83. When channel members are linked by legal agreements that specify each member’s rights and responsibilities,
_____ exists.
a. horizontal channel integration
b. an administered VMS
c. a corporate VMS
d. a channel captain
e. a contractual VMS
84. In an administered vertical marketing system (VMS), inter-organizational relationships are:
a. achieved by informal coordination.
b. formalized through contracts.
c. combined under the ownership of a single organization.
d. guided by legal agreements.
e. achieved by clearly defining the obligations and rights of all channel members.
Chapter 13 – Marketing Channels and Supply-Chain Management
85. In an administered VMS, informal coordination brings about a high level of interorganizational management.
Nonetheless, _____.
a. decision making does not take into account the goals of the system
b. the channel members do not remain autonomous
c. the decision making is not coordinated
d. the channel members remain autonomous
e. the goals of the individual firms are not congruent with the goals of the system
86. 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.
a. contractual
b. administered
c. corporate
d. negotiated
e. institutional
Chapter 13 – Marketing Channels and Supply-Chain Management
87. Yankee Candle, a candle and gift marketing organization has a(n) _____ vertical marketing system arrangement
with its franchised retail store operations.
a. corporate
b. administered
c. negotiated
d. contractual
e. horizontal
88. Which of the following is true of horizontal channel integration?
a. The flexibility of the channel is increased.
b. The markets are more homogeneous.
c. The expanded number of units is coordinated.
d. Efficiencies in advertising, marketing research, and purchasing are increased.
e. Planning and research are increased to cope with decreased competition.
Chapter 13 – Marketing Channels and Supply-Chain Management
89. To expand the number of its retail outlets in the Washington, D.C. area, Whole Foods bought out a small chain of
organic food stores in northern Virginia. This type of integration is known as _____ channel integration.
a. vertical
b. retail
c. horizontal
d. backward
e. forward
90. Order processing, inventory management, materials handling, warehousing, and transportation are the activities that
define:
a. wholesaling.
b. retailing.
c. physical distribution.
d. channel management.
e. drop shipping.
Chapter 13 – Marketing Channels and Supply-Chain Management
91. When Zappos Inc., an online marketer of shoes, accessories, and clothing, contracts out the physical distribution
task to third parties such as UPS, this arrangement is known as _____. This is due to the fact that UPS does not
have managerial authority within the Zappos marketing channel.
a. illegal
b. logistics
c. warehousing
d. wholesaling
e. outsourcing
92. 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:
a. outsourcing.
b. sole-sourcing.
c. logistics.
d. wholesaling.
e. distribution services.
Chapter 13 – Marketing Channels and Supply-Chain Management
93. 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.
a. producers
b. wholesalers
c. retailers
d. selling agents
e. outsourcing
94. The main objective of physical distribution should be to:
a. decrease costs while increasing market coverage.
b. increase service and market coverage.
c. decrease costs while increasing service.
d. increase market coverage and channel power.
e. balance costs and market coverage.
Chapter 13 – Marketing Channels and Supply-Chain Management
95. The best way to reduce overall distribution costs is to:
a. use a total-cost approach to analyze and evaluate the entire system.
b. minimize the costs associated with materials handling and transportation.
c. reduce the number of distribution functions that are necessary.
d. find the cheapest price for each function and use them to create the system.
e. lower the service standards that the company has.
96. An important goal of physical distribution is reducing the:
a. inventory management.
b. outsourcing evaluation.
c. electronic data interchange.
d. order processing.
e. cycle time.
Chapter 13 – Marketing Channels and Supply-Chain Management
97. 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 is competing with UPS
and FedEx in terms of ____.
a. cycle time
b. order processing
c. turn-around time
d. shipping time
e. transportation
98. A goal of _____ is to reduce cycle time or how long it takes to complete a process.
a. time standards
b. processing time
c. production
d. throughput measure
e. physical distribution
Chapter 13 – Marketing Channels and Supply-Chain Management
99. Order processing is defined as:
a. the receipt and transmission of sales order information.
b. the second stage in a physical distribution system.
c. the four main tasks.
d. the same as order handling.
e. electronic processing of order data.
100. Which of the following are the three primary tasks of order processing?
a. Order receipt, order delivery, order follow-up
b. Order handling, inventory management, order delivery
c. Materials handling, warehousing, order delivery
d. Order handling, order entry, order delivery
e. Order receipt, order checking, order delivery
Chapter 13 – Marketing Channels and Supply-Chain Management
101. Walgreen’sdrugstoresprefertoreceiverefillsofprescriptionsthroughaphonebasedsystemwherecustomers
can directly key in the information about the drug. By receiving orders in this manner rather than through a paper-
basedsystemorbyaphoneconversationwithapharmacyemployee,Walgreen’shasbeenabletosavetimeand
money on:
a. electronic data interchange.
b. order entry.
c. inventory management.
d. order delivery.
e. materials handling.
102. The order-processing task that involves verifying product availability, checking prices and customer credit ratings,
and filling orders is:
a. warehousing.
b. order handling.
c. information processing.
d. materials handling.
e. order entry.
Chapter 13 – Marketing Channels and Supply-Chain Management
103. Order handling involves all of the following activities except that the:
a. credit department approves the purchase.
b. order is transmitted to the warehouse.
c. availability of product is verified.
d. warehouse is instructed to fill the order.
e. customer places a purchase order.
104. A commonly used computerized means of integrating order processing with production, inventory, accounting, and
transportation is:
a. web-based inventory management.
b. just-in-time production.
c. electronic data interchange.
d. universal product codes.
e. activity based management.
Chapter 13 – Marketing Channels and Supply-Chain Management
105. Nathan is trying to decide which shipping company to use to transport his custom-made furniture to customers.
Nathan is facing a decision about:
a. order entry.
b. order completion.
c. just-in-time.
d. order handling.
e. order delivery.
106. _____involvesdevelopingandmaintainingadequateassortmentsofproductstomeetcustomers’needs.
a. Just-in-time
b. Order processing
c. Inventory management
d. Merchandise stocking
e. Logistical management
Chapter 13 – Marketing Channels and Supply-Chain Management
107. Greg is a physical distribution manager. He is currently developing and maintaining assortments of products that are
adequate for customer demand. In which of the following stages of the physical distribution system is Greg
currently involved?
a. Order processing
b. Materials handling
c. Inventory management
d. Transportation
e. Warehousing
108. The result of an inventory stockout usually results in a(n)____.
a. increase in inventory costs.
b. increase in lost sales.
c. increase in net profit.
d. increase in loyal customers.
e. decrease in prices.
Chapter 13 – Marketing Channels and Supply-Chain Management
109. Anya, a sales manager for Pacific Lumber, tells Ricardo, 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. Which of the
following inventory management costs does this figure represent?
a. Carrying
b. Replenishment
c. Stockout
d. Safety stock
e. Reorder
110. 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:
a. just-in-time.
b. time management.
c. inventory minimization.
d. economic order quantity.
e. reorder point maximization.
Chapter 13 – Marketing Channels and Supply-Chain Management
111. 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:
a. short order lead times.
b. just-in-time inventory.
c. a controlled usage rate.
d. safety stock.
e. excessive inventory.
112. What is the primary determinant in deciding how materials will be handled?
a. Unit loading
b. Containerization
c. Customer preference
d. Cost reduction
e. Product characteristics
Chapter 13 – Marketing Channels and Supply-Chain Management
113. 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.
a. unit loading
b. piggybacking
c. containerization
d. inventory management
e. priority transportation
114. 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:
a. unit loading.
b. containerization.
c. freight forwarding.
d. unitized shipping.
e. bonded packaging.
Chapter 13 – Marketing Channels and Supply-Chain Management
115. Managers and consultants at Greenscapes Corp. 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:
a. warehousing.
b. inventory management.
c. materials handling.
d. cycle time.
e. containerization.
116. Which of the following physical distribution functions involves design and operation of facilities for storing goods?
a. Order processing
b. Materials handling
c. Transportation
d. Warehousing
e. Inventory management
Chapter 13 – Marketing Channels and Supply-Chain Management
117. What function of physical distribution enables companies to compensate for dissimilar production and consumption
rates and stabilize prices and availability of seasonal items?
a. Materials handling
b. Warehousing
c. Transportation
d. Inventory management
e. Order processing
118. 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 an example of a:
a. flexible warehouse.
b. dispatching center.
c. distribution center.
d. private warehouse.
e. public warehouse.
Chapter 13 – Marketing Channels and Supply-Chain Management
119. ClearChem is a producer of chemicals used in car detailing and painting. Because of the volatility of their chemical
products when exposed to dirt and heat, ClearChem operates its own facilities for storing and shipping its products.
ClearChem’sfacilitiesaremostlikelyknownas:
a. distribution centers.
b. product storehouses.
c. public warehouses.
d. mega warehouses.
e. private warehouses.
120. 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.
a. distribution center
b. private warehouse
c. dispatching shipment system
d. public warehouse
e. materials handling system
Chapter 13 – Marketing Channels and Supply-Chain Management