e.
a tying arrangement
97. Vertical channel integration
a.
results in two or more different management teams for each member of the channel.
b.
is made possible when a large corporation divests itself of smaller subsidiaries.
c.
is a shift back to the conventional channel of distribution.
d.
combines institutions at the same level of operation.
e.
is made possible by purchasing the operations of a link in the channel.
98. When a single channel member manages an integrated marketing channel to achieve low-cost, efficient
distribution for satisfying target markets, ____ exists.
a.
a vertical marketing system
b.
horizontal channel integration
c.
channel power
d.
channel cooperation
e.
extensive distribution
99. Warner Bros. sells cookie jars, puzzles, photo albums, and other items featuring its popular cartoon
characters directly through its own retail outlets. This is an example of
a.
channel leadership.
b.
channel cooperation.
c.
channel conflict.
d.
horizontal channel integration.
e.
vertical channel integration.
100. The reasons a vertically integrated channel can be more effective against competition is because of all
of the following except
a.
the consolidation of power.
b.
tightly controlled and bureaucratic management style.
c.
the ability to inhibit competitors.
d.
the sharing of responsibilities and information.
e.
increased bargaining power.
101. Bennetton, a leading manufacturer of knitwear in Italy, expanded its operations to include retail outlets
in the United States and South America. This type of channel is called
a.
horizontal integration.
b.
vertical integration.
c.
multilevel integration.
d.
retail integration.
e.
merchandising integration.
102. 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.
103. 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.
104. 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
105. In an administered vertical marketing system (VMS), interorganizational 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.
106. 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.
107. 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
108. 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
109. Select the greatest advantage of horizontal channel integration.
a.
The flexibility of the channel is decreased.
b.
The markets are more heterogeneous.
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 increased competition.
110. 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 called
a.
vertical.
b.
retail.
c.
horizontal.
d.
backward.
e.
forward.
111. 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.
112. The notion of physical distribution is
a.
speed of delivery.
b.
used only by manufacturers.
c.
the movement of products from producers to end users.
d.
primarily the wholesaler’s responsibility.
e.
an assessment of distribution costs.
113. 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 called ____. 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.
114. 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.
115. Physical distribution activities may be performed by a producer, wholesaler, retailer or
a.
not performed at all.
b.
the customer.
c.
investors in any of the previous three.
d.
solely through technology.
e.
they may be outsourced.
116. 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
117. 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.
118. 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.
119. According to the text, physical distribution cost tradeoffs enable firms to
a.
resolve pricing conflicts among channel partners.
b.
minimize risk during test marketing of new products.
c.
reduce costs of all distribution functions simultaneously.
d.
resolve pricing conflicts within industry sectors.
e.
utilize resources for greatest cost-effectiveness.
120. At the annual managers’ planning conference, Jackie Conrad asks the other managers to consider her
proposal to increase the quantity of inventory to a five-week supply in order to increase the percentage
of completely filled customer orders from 85 percent to 90 percent. She states that she is willing to
trade off the ____ incurred for the positive effect of better customer service.
a.
lower response time
b.
higher warehousing costs
c.
higher transportation costs
d.
higher order processing costs
e.
higher performance levels
121. An important goal of physical distribution is reducing the time it takes to complete
a.
inventory management.
b.
outsourcing evaluation.
c.
electronic data interchange.
d.
order processing.
e.
cycle time.
122. 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.
123. A goal of physical distribution is to reduce ____ or how long it takes to complete a process.
a.
time standards
b.
processing time
c.
production
d.
throughput measure
e.
cycle time
124. 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 information.
125. What 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
126. Walgreen’s drug stores prefer to receive refills of prescriptions through a phone-based system where
customers can directly key in the information about the drug. By receiving orders in this manner
rather than through a paper-based system or by a phone conversation with a pharmacy employee,
Walgreen’s has been able to save time and money on
a.
electronic data interchange.
b.
order entry.
c.
inventory management.
d.
order delivery.
e.
materials handling.
127. 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.
128. 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.
129. 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.
c.
electronic data interchange.
d.
universal product codes.
e.
activity based management.
130. 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.
131. Because of the significant investment many companies have in the products they sell to customers,
they must develop and maintain adequate varieties of products to meet their customers’ needs. This is
called
a.
just-in-time.
b.
order processing.
c.
inventory management.
d.
merchandise stocking.
e.
logistical management.
132. Greg is a physical distribution manager. He is currently developing and maintaining assortments of
products that are adequate for customer demand. In which stage in the physical distribution system is
Greg currently involved?
a.
Order processing
b.
Materials handling
c.
Inventory management
d.
Transportation
e.
Warehousing
133. The result of an inventory stockout usually results in ___.
a.
an increase in inventory costs.
b.
an increase in lost sales.
c.
an increase in net profit.
d.
an increase in loyal customers.
e.
a decrease in prices.
134. Anya, 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. This figure represents which of the following inventory management costs?
a.
Carrying
b.
Replenishment
c.
Stockout
d.
Safety stock
e.
Reorder
135. What is the reorder point if the usage rate is 10 units per day, the order lead time is five days, and the
safety stock is 30?
a.
50
b.
150
c.
80
d.
200
e.
400
136. 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 (JIT).
b.
time management.
c.
inventory minimization.
d.
economic order quantity.
e.
reorder point maximization.
137. 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.
138. All of the following are concepts used in a just-in-time inventory management system except
a.
supplies arrive just as they are needed.
b.
safety stock is kept to reduce stockouts.
c.
much waste is eliminated.
d.
purchases are made in small quantities.
e.
purchases are made frequently.
139. Aaron attends a seminar on just-in-time inventory management. Excited about the idea, he returns to
his office at Atlanta Auto Supply to start designing such an inventory system. Which of the following
steps must Aaron take as he institutes this change?
a.
Increase safety stock
b.
Raise the reorder point
c.
Reduce customer service standard
d.
Increase order frequency
e.
Reduce estimates of inventory turnover rate
140. 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
141. 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
142. Kawasaki places several motorcycles in “pods” in order to load them efficiently using forklifts. This
system of materials handling is called
a.
warehousing.
b.
containerization.
c.
group storage.
d.
unit loading.
e.
mechanized handling.
143. 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.
144. Managers and consultants at Colgate-Palmolive 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.
145. 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
146. 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