66) A stock order point of 10 means ordering the product ________.
A) every 10 days
B) when stock falls to 10 units
C) every 10 units
D) when stock falls to 9 units
E) in batches of 10 items
67) Optimal order quantities exist when the curves for the order-processing cost per unit and
inventory-carrying cost per unit ________.
A) are collinear
B) are diagonal to each other
C) intersect
D) are parallel to each other
E) equal zero
68) E&OE is trying to minimize its inventory costs, which are extremely high. The company has
realized that it can achieve this by maintaining a near-zero inventory and producing more only
once a product is ordered. Which of the following is true for E&OE?
A) Inventory costs are lower than order-processing costs.
B) Running costs are higher than inventory-carrying costs.
C) Setup costs for the products are low.
D) Order-processing costs are high.
E) Order-processing costs are lower than setup costs.
69) E&OE is trying to minimize its inventory costs, which are extremely high. The company has
realized that it can achieve this by maintaining a near-zero inventory and producing only once a
product is ordered. Which of the following will be true for E&OE?
A) Short production runs will be more expensive than longer ones.
B) Setup and order-processing costs will be high.
C) The order point will be high.
D) Order-processing costs will be lower than the inventory-carrying costs.
E) E&OE can reduce the average cost per unit by producing a long run.
70) Beyond the optimal order quantity, total cost per unit increases because ________.
A) inventory-carrying cost per unit increases
B) inventory-carrying cost per unit decreases
C) order-processing cost per unit increases
D) order-processing cost per unit increases though inventory cost decreases
E) inventory-processing cost per unit falls slowly
71) Companies are reducing their inventory costs by treating inventory items differently,
positioning them according to risk and opportunity. High-risk, low-opportunity items are known
as ________.
A) nuisance items
B) bottleneck items
C) variable items
D) critical items
E) commodities
72) HCN recently introduced a product that the distributor considers a “bottleneck” item. What is
the risk/opportunity relationship for bottleneck items?
A) low risk, mediocre opportunity
B) low risk, high opportunity
C) low risk, low opportunity
D) high risk, mediocre opportunity
E) high risk, low opportunity
73) An item described as low-risk and low-opportunity is a ________.
A) nuisance item
B) bottleneck item
C) variable item
D) critical item
E) commodity
74) ________ consists of putting goods in boxes or trailers that are easy to transfer between two
transportation modes.
A) Containerization
B) Haulage
C) Inventory carrying
D) Order processing
E) Warehousing
75) Which of the following is an example of a private carrier?
A) MET is a transporter that operates only in the Chicago area and charges fixed prices.
B) BCL is a family firm that owns only three trucks, but takes small orders for transport.
C) VTV owns a fleet of trucks and transports goods for any client for a fee.
D) COM is a shipping firm that transports goods by road and rail across the U.S.
E) BEL Inc. manufactures parts for automobiles and transports its products to customers itself.
76) The trucking firm hired by your transportation manager provides a trucking service between
the city of Sacramento and the surrounding towns on a regular schedule and at fixed prices. The
trucking firm saves transportation costs by transporting the goods using trains as well as trucks,
instead of trucks alone. Your transportation manager has hired a(n) ________.
A) airship carrier
B) airtruck carrier
C) trainship carrier
D) fishyback carrier
E) piggyback carrier
77) If the shipper owns its own truck or air fleet, it becomes a ________.
A) containerized carrier
B) private carrier
C) contract carrier
D) common carrier
E) diversified carrier
78) Retailing includes all the activities involved in selling goods or services directly to final
consumers.
79) Full-service retailers generally have the lowest costs of all retail types.
80) Discount stores usually stock leftover goods, overruns, and irregular merchandise, sold at
less than retail.
81) The network marketing sales system works by recruiting independent businesspeople who
act as distributors.
82) Electronic shopping is a form of direct marketing.
83) A superstore is a storeless retailer serving a specific clientele who are entitled to buy from a
list of retailers that have agreed to give discounts in return for membership.
84) A retailer cooperative is a retail firm that is owned by its customers.
85) A franchise organization is a corporate retail organization.
86) The franchisor owns a trade or service mark and licenses it to franchisees in return for
royalty payments.
87) “Pop-up” stores let retailers promote brands to seasonal shoppers for a limited time.
88) Department stores only face competition from other department stores as other retailing
forms are not a threat to their sales and profitability.
89) Consumers now receive sales offers through direct-mail letters and catalogs, television, cell
phones, and the Internet. The nonstore-based retailers are taking business away from store-based
retailers.
90) Supercenters retail grocery items as well as a huge selection of nonfood merchandise.
91) Growth in the retail market is centered firmly in the middle market, leaving luxury retailers
and discounting specialists struggling.
92) As discount retailers improve their quality and image, consumers have been willing to trade
down.
93) Electronic shelf labeling allows retailers to check inventory levels instantaneously.
94) Firms are increasingly recognizing the importance of influencing consumers at the point of
purchase.
95) Retailers can target their customers more effectively by using only a single channel to reach
them.
96) Featuring exclusive national brands that are not available at competing retailers is a way of
generating consumer interest in a retailer.
97) In order to clearly differentiate themselves from competitors, retailers must keep
merchandise and prices always consistent.
98) The gross margin on a product bears a direct relation to the direct product profit.
99) Some high-volume products may have such high handling costs that they are less profitable
and deserve less shelf space than low-volume products.
100) Mass merchandisers are usually high-markup, lower-volume stores.
101) Low prices on some items serve as traffic builders or loss leaders for retailers.
102) EDLP can lead to lower advertising costs and higher retail profits.
103) Accepting telephone and mail orders is an example of the ancillary services that a retailer
offers.
104) Postpurchase services include shipping and delivery, gift wrapping, adjustments and
returns.
105) Private label or store brands are also known as generics.
106) The lower price of generics is made possible by lower-cost labeling and packaging and
minimal advertising, and sometimes lower-quality ingredients.
107) Wholesaling includes all the activities in selling goods or services to those who buy for
resale or
business use.
108) Wholesalers exclude manufacturers and farmers because they are engaged primarily in
production,
but include retailers, as they are selling to the end consumer.
109) Merchant wholesalers are independently owned businesses that take title to the merchandise
they handle.
110) Most companies today are trying to increase the order–to-payment cycle.
111) More stocking locations mean goods can be delivered to customers more quickly, and
warehousing and inventory costs are lower.
112) Inventory cost increases at an accelerating rate as the customer-service level approaches
100 percent.
113) If setup costs are high, the manufacturer can produce the item often, and the average cost
per item is stable and equal to the running costs.
114) Order-processing costs must be compared with inventory-carrying costs because the larger
the average stock carried, the higher the inventory-carrying costs.
115) As inventory draws down, management must know at what stock level to place a new order.
This
stock level is called the order point.
116) The order-processing cost per unit increases with the number of units ordered because the
order costs are spread over more units.
117) Companies who want to carry near-zero inventory should build for order, not for stock.
118) List and explain the four service levels offered by retailers.