68) 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
69) 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
70) 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
71) 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.
72) 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
73) 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.
74) 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.
75) 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.
76) 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
77) 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.
78) 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
79) 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
80) 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.
81) 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.
82) 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
83) In terms of merchandise, what is the difference between a classification and a category?
84) How are vendors in a better position to manage a category than a retailer?
85) What can a retailer do to increase inventory turnover, and what are the drawbacks to these
approaches?
86) Describe both the staple merchandise and fashion merchandise categories.
87) What are the sources of information for retailers to develop forecasts for fashion merchandise
categories?
88) What is the difference between variety and assortment?
89) How can having a high backup stock adversely affect a retailer?
90) What are the factors that determine the level of required backup stock?
91) What are the decisions influencing the allocation of merchandise to stores?
92) Explain briefly the ABC analysis method for analyzing merchandise management
performance.