Retailing Management, 10e (Levy)
Chapter 11 Managing the Merchandise Planning Process
1) Buyers, divisional merchandise managers, and general merchandise managers are some of those
who undertake the responsibilities of merchandise management.
2) The highest classification level in the buying organization is the merchandise category.
3) Fashion merchandise consists of items that are in continuous demand over an extended time
period.
4) Seasonal merchandise consists of items whose sales fluctuate dramatically depending on the
time of the year.
5) In marketing research, an in-depth interview is an unstructured personal interview in which the
interviewer uses extensive probing to get individual respondents to talk in detail about a subject.
6) Assortment, or depth, of a merchandise category is the number of different merchandising
subcategories offered.
7) Buyers need not compromise on breadth or depth of merchandise to increase product
availability.
8) Shorter lead times result in a higher level of backup stock required to maintain the same level of
product availability.
9) The quantity of merchandise has a bigger impact on profitability than allocation decisions.
10) An ABC analysis identifies the performance of individual SKUs in the assortment plan.
11) Which of the following is the process by which a retailer attempts to offer the appropriate
quantity of the right merchandise, in the right place, and at the right time, while meeting the
company’s financial goals?
A) Category management
B) Quick response inventory management
C) Merchandise management
D) Inventory control
E) Materials procurement and handling
12) The highest classification level in a buying organization is the
A) order point.
B) buying group.
C) stock-keeping unit.
D) merchandise group.
E) department.
13) A retailer’s merchandise group is managed by a
A) divisional merchandise manager (DMM).
B) general merchandise manager (GMM).
C) buyer.
D) category captain.
E) category manager.
14) Which of the following schemes is the correct order describing the levels of the merchandise
classification scheme from the highest level to the lowest level?
A) Department-Merchandise Group-Classification-Category-stock-keeping unit (SKU)
B) Merchandise Group-Classification-Department-Category-SKU
C) Merchandise Group-Department-Classification-Category-SKU
D) Classification-Department-Category-Merchandise Group-SKU
E) Category-Classification-Merchandise Group-Department-SKU
15) The second highest level in the merchandise classification structure is the
A) stock-keeping unit.
B) category.
C) department.
D) merchandise group.
E) classification.
16) Which of the following statements is not true of a department in the merchandise classification
scheme?
A) It is the second level in the merchandise classification scheme.
B) It is at a lower level than the merchandise group in the merchandise classification scheme.
C) It is a level higher than classification in the merchandise classification scheme.
D) The DMM, who manages the department, is responsible for several merchandise
classifications.
E) It is managed by a general merchandise manager (GMM).
17) Which of the following statements is not true of the merchandise classification scheme?
A) A stock-keeping unit (SKU) is the smallest unit available for inventory control.
B) In soft goods, a SKU usually means a particular size, color, and style.
C) SKUs are the basic units of analysis for making merchandising management decisions.
D) The highest classification level is the merchandise group.
E) A classification is a group of items targeting the same customer type.
18) A ________ is a group of items targeting the same customer type, such as girls’ sizes 4 to 6.
A) stock-keeping unit
B) department
C) merchandise group
D) classification
E) merchandise category
19) Which of the following products is an example of a classification?
A) Sweaters
B) Infant apparel
C) Polo shirts
D) Shoes
E) Formal shirts
20) Which of the following statements is true of a merchandise category?
A) It is the basic unit of analysis for merchandising decisions.
B) It is the smallest unit available for keeping inventory.
C) It is the unit of inventory least affected by seasonal trends.
D) It is the largest unit available for keeping inventory.
E) It is an assortment of complementary SKUs.
21) Which of the following products is not an example of a stock-keeping unit (SKU)?
A) Size 12, white, full sleeve, Ralph Lauren shirts
B) Teen necklaces with matching bracelets and rings
C) Queen-size Sealy mattress with extra back support and Scotch Guard
D) No-ad sunscreen, SPF 50 in 50-ounce squeeze-top dispenser
E) V-8 vegetable juice in 32-ounce can
22) A ________ is the basic unit of analysis for making merchandise management decisions.
A) department
B) stock-keeping unit
C) classification
D) merchandise group
E) merchandise category
23) A(n) ________ is the smallest unit available for inventory control.
A) category
B) stock-keeping unit
C) classification
D) merchandise group
E) assortment
24) Which of the following is not true of category management?
A) Managing merchandise within a category by brand can lead to inefficiencies because it fails to
consider the interdependencies between SKUs in the category.
B) The category management approach to managing breakfast cereals in supermarkets should
have one buyer or category manager who oversees all merchandising activities for the entire
category.
C) A category manager ensures that the store’s assortment includes the “best” combination of sizes
and vendors.
D) A category manager chooses vendors that will get the most profit from the allocated space.
E) A category manager is also called a category captain and works with vendors to get the most
profit from collaborative relationships.
25) Which of the following persons is a vendor who forms an alliance with a retailer to help gain
consumer insight, satisfy customer needs, and improve performance and profit across a category?
A) Assortment supervisor
B) Category captain
C) Category manager
D) Category specialist
E) Consumer advocate
26) What is the drawback of utilizing category captains?
A) The vendor category captain could take advantage of their position and maximize their own
sales.
B) Retailers tend to ignore recommendations of the category captain.
C) Retailers take advantage of the information and misuse it.
D) Retailers can take advantage of their position and minimize competing brands.
E) Vendor category captains are not in a good position when compared to retailers to manage a
category.
27) Why are vendors in a better position to manage a category than a smaller retailer?
A) Retailers manage brands more often than categories.
B) Retailers managing merchandise groups have little experience with categories.
C) Vendors have superior information through their focus on a specific category.
D) Vendors work to manage higher sales within their companies.
E) Retailers are traditionally poor category managers.
28) Which of the following statements is not a potential problem with appointing vendors as
category captains?
A) Appointing vendors as category captains makes merchandise management tasks difficult for
retailers.
B) Vendors could take advantage of their position by suggesting an assortment plan that includes
most of its SKUs and exclude other SKUs that contribute more so to the retailer’s profitability.
C) The vendor category captain could collude with the retailer to fix prices.
D) The vendor category captain could block other brands from access to shelf space.
E) The dependence on the vendor category captain may cause a retailer to miss opportunity for
increasing margins through their private-label SKUs.
29) A performance measure which assesses a buyer’s contribution to ROA is called the
A) cost plus pricing.
B) gross margin.
C) gross margin return on investment.
D) net profit.
E) break-even point.
30) When there is a high inventory turnover, there is an increase in sales because
A) price points are set higher to accommodate for potential sales loss.
B) new merchandise is continually available to customers.
C) the merchandise begins to look shopworn.
D) sales are increased by reducing prices.
E) more money is available to buy new merchandise.
31) Which of the following is not a benefit of a high inventory turnover?
A) Continuous availability of new merchandise
B) Improved salesperson morale
C) Reduced obsolescence risk and markdowns
D) New buying opportunities
E) Reduced gross margin
32) Which of the following is a result of high inventory turnover?
A) Improved employee morale
B) A decrease in the cost of goods sold
C) An increase in promotions and markdowns
D) Higher risk of product obsolescence
E) A decrease in profits
33) Merchandise like men’s crew socks, canned peas, college ruled loose leaf paper, and 60-watt
light bulbs would be considered ________ that are in continuous demand over an extended time
period.
A) expected merchandise
B) sample merchandise
C) staple merchandise
D) seasonal merchandise
E) fashion merchandise
34) Which of the following is an example of staple merchandise?
A) The latest style of denim jeans
B) Luggage
C) Flannel sheets
D) Platform shoes
E) Men’s black socks
35) Smart Wash is a popular brand of detergent powder. The stock needs to be continuously
replenished in stores and supermarkets due to its high demand. The detergent powder belongs to
the category of
A) expected merchandise.
B) sample merchandise.
C) staple merchandise.
D) seasonal merchandise.
E) fashion merchandise.
36) ________ consist of items that are only in demand for a relatively short period of time.
A) Expected merchandise categories
B) Sample merchandise categories
C) Staple merchandise categories
D) General merchandise categories
E) Fashion merchandise categories
37) Which of the following is not true of a fashion merchandise category?
A) It consists of items that are only in demand for a relatively short period of time.
B) New products are continually introduced into these categories.
C) The introduction of new products makes the existing products obsolete.
D) The change of colors and styles can make the basic product fashion merchandise.
E) Forecasting sales for this category is simplistic and predictable.
38) Which of the following is not true of staple merchandise categories?
A) They consist of items that are in continuous demand over an extended time period.
B) The number of new product introductions in these categories is limited.
C) The demand for these categories is predictable.
D) Because their sales are relatively steady from day-to-day, a periodic inventory system is used.
E) Merchandise planning systems for these categories focus on continuous replenishment.
39) Which of the following statements holds true for the purchase of staple merchandise?
A) Buyers often do not reorder additional merchandise after placing the first order.
B) Buyers for staple merchandise categories have much less flexibility in correcting forecasting
errors.
C) Staple merchandise is purchased using a continuous replenishment system by monitoring sales
and generating replacement orders.
D) The staple merchandise buying system requires more experienced buyers.
E) The main objective of staple merchandise buying is to be as close to out of stock as possible.
40) ________ categories consist of items whose sales fluctuate dramatically depending on the time
of year.
A) Expected merchandise
B) Sample merchandise
C) Staple merchandise
D) Seasonal merchandise
E) General merchandise
41) Garden rakes, lawn mowers, and sunscreen would be considered part of a(n) ________
category.
A) expected merchandise
B) sample merchandise
C) staple merchandise
D) seasonal merchandise
E) fashion merchandise
42) Which of the following is not true of fashion merchandise categories?
A) Forecasting the sales for fashion merchandise categories is more challenging than forecasting
for staple goods.
B) Buyers for fashion merchandise categories have a high degree of flexibility in correcting
forecasting errors.
C) They have a short life cycle.
D) Buyers often do not have a chance to reorder additional merchandise after an initial order is
placed.
E) New products are continuously being introduced.
43) Which of the following merchandise systems focuses on staying as close to out of stock as
possible?
A) Fashion merchandise management system
B) Assortment driven management system
C) Historical precedence management system
D) Staple merchandise management system
E) Allocated space management system