44) Which of the following merchandise categories is purchased in a manner similar to fashion
merchandise?
A) Promotional merchandise
B) Sample merchandise
C) Staple merchandise
D) Seasonal merchandise
E) Expected merchandise
45) What is the first step in merchandise management planning?
A) Developing a forecast for sales
B) Executing a merchandise plan
C) Developing a business plan
D) Determining the appropriate inventory levels
E) Penetrating a new market
46) Which of the following is true of the forecasting approach for staple merchandise categories?
A) Buyers need to find out what customers are going to want in the future.
B) Forecasts are typically based on extrapolating historical sales.
C) Buyers for these categories rely heavily upon forecast services.
D) Buyers for these categories conduct focus group studies to find out consumers’ opinions.
E) Buyers for these categories depend upon category sales forecasts which vendors provide.
47) Which of the following processes is an unstructured form of personal questioning used in
market research and involves extensive probing to get individual respondents to talk in detail about
a subject?
A) Coolhunting
B) Crowd manipulation
C) Focus group interview
D) In-depth interview
E) Showrooming
48) A(n) ________ is a small group of respondents interviewed by a moderator using a loosely
structured format in which participants are encouraged to express their views and comment on the
views of others in the group.
A) focus group
B) ethnic group
C) demogroup
D) customer advisory council
E) online research community
49) Which of the following best describes variety?
A) Product availability
B) Inventory that results from a replenishment process
C) The percentage of demand for a particular SKU that is satisfied
D) The number of SKUs in a store
E) The number of different merchandising subcategories within a store
50) Father Christmas is a retail store that sells a unique Santa made from fur, wool, and tapestry.
The store does not sell any other product. Therefore, the store has little
A) category.
B) assortment.
C) medley.
D) merchandise mixtures.
E) variety.
51) ________ of a retailer’s merchandise is the number of SKUs within a subcategory.
A) Merchandise breadth
B) Horizontal integration
C) Variety
D) Assortment
E) Merchandise mixture
52) ________ of a merchandise category is the number of different merchandising subcategories
offered.
A) Merchandise depth
B) Classification
C) Variety
D) Assortment
E) Merchandise mixture
53) Which of the following statements about assortment is not true?
A) The number of SKUs offered in a merchandise category is a strategic decision.
B) The breadth and depth of the assortment in a merchandise category can affect the retailer’s
brand image.
C) Offering a large assortment normally simplifies a customer’s buying decision.
D) Customer perceptions on assortments are based on the availability of the customer’s favorite
SKU and the size of the category’s display.
E) Buyers need to consider the degree to which categories in a department complement each other.
54) Which of the following statements does not describe the trade-offs that buyers should consider
for merchandise assortment planning?
A) Increasing sales by offering more breadth and depth can potentially reduce inventory turnover.
B) Increasing sales by offering more breadth and depth can potentially reduce GMROI by having
more stock-keeping units (SKUs).
C) Increasing breadth and depth can increase the need to put more merchandise on sale and thus
negatively affect the gross margin.
D) SKU rationalization programs can help in increasing inventory turnover without reducing sales.
E) The more SKUs offered, greater the chance of breaking sizes—running out of a specific size
SKU.
55) The ________ is the number of each SKU in the assortment plan that the buyer wants to have
available for purchase in each store.
A) merchandise budget plan
B) order point
C) assortment plan
D) model stock plan
E) stock-to-sales ratio
56) Which of the following terms is defined as the percentage of demand for a particular SKU that
is satisfied?
A) Assortment
B) Economic order quantity
C) Merchandise mix
D) Product availability
E) Variety
57) ________ is also referred to as the level of support or service level.
A) Product assortment
B) Product availability
C) Product satisfaction
D) Product depth
E) Product breadth
58) Father Christmas is a retail store that sells a unique Santa made from fur, wool, and tapestry. If
150 customers wish to buy a Santa from this store, and it sells 120 before running out of stock,
what is its service level?
A) 15 percent
B) 80 percent
C) 20 percent
D) 85 percent
E) 88 percent
59) Which of the following statements does not describe the relationship between product
availability and stock level?
A) The higher the product availability, the greater the amount of backup stock.
B) More backup stock is needed in the model stock plan if a retailer wants to increase product
availability.
C) The quantity of backup stock is fixed by a retailer and is not influenced by product availability.
D) If the product availability gets too high, scarce financial resources will be wasted on needless
inventory that could be more profitably invested in increasing variety or assortment.
E) A very high level of product availability results in a prohibitively high inventory investment.
60) Which of the following factors does not contribute to the increase of buffer stock levels?
A) The high service level that a retailer tries to achieve
B) High fluctuations in demand
C) Long lead time for delivery from the vendor
D) Fluctuations in vendor lead time
E) Frequent store deliveries
61) ________ refers to inventory for which the level goes up and down in response to the
replenishment process.
A) Cycle stock
B) Backup stock
C) Basic stock
D) Perpetual inventory
E) Order point
62) Which of the following statements does not describe the approach that deals with cycle (base)
stock?
A) A retailer tries to reduce the base stock to keep its inventory investment low.
B) One approach for reducing the base stock is to reorder and receive merchandise from the vendor
more often.
C) Frequent orderings with smaller quantities will reduce transportation costs.
D) Shorter delivery time from the vendor will reduce the level of base stock.
E) Shorter lead time from the vendor will reduce the level of base stock.
63) Since sales and the arrival of merchandise from vendors can’t be predicted with perfect
accuracy, retailers have to carry
A) backup stock.
B) basic merchandise.
C) perpetual inventory.
D) cycle stock.
E) base stock.
64) A catalog retailer of kitchen items observes that during some weeks it sells 40 muffin pans, and
during other weeks it sells none. A reorder takes up to three weeks. The probability of running out
of pans and alienating its customers can be alleviated by maintaining
A) non-ledgered stock.
B) cycle stock.
C) hidden inventory.
D) backup stock.
E) lead stock.
65) Which of the following is not a factor that determines the level of required backup stock?
A) The product availability the retailer wishes to provide
B) Fluctuations in demand
C) Lead time for delivery from the vendor
D) Fluctuations in vendor lead time
E) Price of the product
66) ________ is the amount of time between the recognition that an order needs to be placed and
the point at which the merchandise arrives in the store and is ready for sale.
A) Lead time
B) Order time
C) Fill rate
D) Service level
E) Delivery rate
67) The percentage of SKUs received complete on a particular order from a vendor is called the
A) product availability.
B) order rate.
C) fill rate.
D) service level.
E) delivery rate.