Merchandise cannot generally be examined by consumers in which retail formats?
a. membership clubs and flea markets
b. direct selling and specialty stores
c. direct marketing and vending machines
d. retail catalog showrooms and membership clubs
The quick ratio measures a retailer’s ability to _____.
a. raise capital with a stock offering
b. earn a satisfactory profit
c. cover short-term liabilities
d. turn inventory at satisfactory levels
Which statement concerning destination stores is not correct?
a. A destination store has a larger trading area than a traditional retailer.
b. The presence of a destination store in a major shopping center has no effect on the
trading area of parasite stores.
c. Reilly’s law does not reflect higher trading areas for a destination store.
d. Huff’s law does not reflect higher trading areas for a destination store.
A retailer seeks to conduct a survey that requires lengthy responses by respondents.
Many questions are also difficult to understand. The retailer should utilize which survey
technique?
a. observation
b. telephone survey
c. mail survey
d. personal survey
Huff’s law is an example of a(n) _____ model.
a. regression
b. analog
c. gravity
d. trend
A value delivery system is based on _____.
a. outsourcing
b. cost minimization
c. a high degree of cooperation among all channel members
d. one channel member conducting all activities
Which of the following retail institutions does not fit into the definition of a
supermarket?
a. conventional supermarket
b. warehouse store
c. superstore
d. convenience store
The medium with the longest lead time is _____.
a. radio
b. direct mail
c. telephone directories
d. magazines
A retailer uses a stock-counting-based physical inventory system. Its beginning
inventory on January 1 is 370 units and total purchases in January are 155 units. Sales
for January are 265 units. A physical count of goods as of February 1 reveals 243 units.
Stock shortages for the period equal _____.
a. 10
b. 17
c. 29
d. 98
A firm has $60,000 in cash, $200,000 in accounts receivable, and $400,000 in current
liabilities. Its quick ratio is _____.
a. 0.5
b. 0.65
c. 1.7
d. 2.0
If a cost complement is 0.8, that means _____.
a. the firm has a gross margin of 80 percent
b. 80 cents of each retail sales dollar covers the merchandise cost
c. stock shortages are 20 percent of sales
d. the firm is profitable
The major difference between an initial markup and a maintained markup is that the
maintained markup reflects _____.
a. planned shortages
b. planned retail operating expenses
c. actual prices received and actual shortages
d. actual purchases
Personnel are best adapted to local conditions through which method of classifying
jobs?
a. geographic classification
b. functional classification
c. product classification
d. interdivisional classification
If demand-oriented pricing specifies the maximum price consumers will pay for a good
or service, then cost-oriented pricing sets _____.
a. prestige pricing
b. seasonal pricing
c. psychological pricing
d. the price floor
On average, what percent of every sales dollar goes to department store retailers as
compensation for the activities they perform?
a. 25
b. 33
c. 45
d. 50
Intensive media coverage is _____ reach with _____ frequency.
a. low; low
b. low; high
c. high; low
d. high; high
Which audit needs to be conducted when the store is open?
a. determining shortages
b. determining the efficiency of a new lighting system
c. analyzing a point-of-sale system in handling price changes
d. analyzing the extent of employee turnover
Operations standards are most rigid and the choice of suppliers is most restricted in
which ownership and management alternative?
a. franchise
b. buying an existing business
c. starting a new business
d. partnership
An appliance firm’s adjusted retail book value is $570,000 and its cost complement is
0.75. Its closing inventory at cost is $427,500.
The size of a retailer’s trading area is based solely upon residents, not employees in
office buildings or factories.
Constrained decision making is more characteristic of product/trademark franchising
than business format franchising.
GMROI combines two measures: gross profit and return on investment.
In general, retailer descriptions of items in a model stock plan are more consistent over
time than descriptions of items in a basic stock list.
In the separate store organization, each store has autonomy for merchandising and
operations decisions.
Retailers desiring to minimize consumer cognitive dissonance should focus on
consumer after-purchase service and on realistic selling presentations and advertising
campaigns.
In bait-and-switch advertising, the retail advertiser has no intention of selling the
advertised item at the advertised price.