Question 1

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

Accepted Answer

The first step in merchandise management planning is to develop a forecast for category sales. The approach for forecasting sales of staple merchandise is to project past sales trends into the future, while making adjustments for any anticipated factors, such as promotions and weather, that may affect future sales.

Question 2

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.

Accepted Answer

Large assortments are particularly appealing to customers who seek variety-those who want to try new things. However, offering a large assortment can make the purchase decision more complex and time-consuming and potentially overwhelms the consumer, which could reduce sales.

Question 3

________ of a merchandise category is the number of different merchandising subcategories offered.
A) Merchandise depth
B) Classification
C) Variety
D) Assortment
E) Merchandise mixture

Accepted Answer

Variety is the breadth of a retailer's merchandise and the number of different merchandising subcategories offered.

Question 4

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

Accepted Answer

Seasonal merchandise categories consist of items whose sales fluctuate dramatically depending on the time of the year.

Question 5

________ 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

Accepted Answer

Assortment refers to the depth of merchandise, or the number of SKUs within a subcategory.

Question 6

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

Accepted Answer

A focus group is a small group of respondents interviewed by a moderator using a loosely structured format. Participants are encouraged to express their views and comment on the views of others in the group.

Question 7

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

Accepted Answer

In the context of merchandise planning, the variety, or breadth, of a merchandise category is the number of different merchandising subcategories offered.

Question 8

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

Accepted Answer

An important objective of merchandise planning systems for fashion merchandise categories is to be as close to out of stock as possible at the same time that the SKUs move out of fashion.

Question 9

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.

Accepted Answer

If the backup stock is too low, the retailer will lose sales and possibly customers as well when they find that the products they want are not available from the retailer.

Question 10

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.

Accepted Answer

The sales of staple merchandise are relatively constant from year to year. Thus, forecasts are typically based on extrapolating historical sales.

Question 11

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

Accepted Answer

Plans for seasonal merchandise, like fashion merchandise, hope to zero out inventory at the end of the season.

Question 12

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.

Accepted Answer

Variety is the breadth of a retailer's merchandise and the number of different merchandising subcategories offered.

Question 13

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

Accepted Answer

The model stock plan is the number of each SKU in the assortment plan that the buyer wants to have available for purchase in each store.

Question 14

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.

Accepted Answer

Many retailers have initiated SKU rationalization programs in their efforts to analyze the benefits they might gain from deleting, adding, or keeping certain items in their assortments. The objective of such a program is to increase inventory turnover by reducing the number of SKUs without reducing sales.

Question 15

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

Accepted Answer

Product availability is defined as the percentage of the demand for a particular SKU that is satisfied. It is also referred to as the level of support or service level.

Question 16

________ 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

Accepted Answer

Product availability is also referred to as the level of support or service level.

Question 17

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.

Accepted Answer

Buyers for fashion merchandise categories have less flexibility in correcting forecasting errors.

Question 18

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

Accepted Answer

Frequent store deliveries require less buffer stocks.

Question 19

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

Accepted Answer

The 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.

Question 20

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

Accepted Answer

Product availability is defined as the percentage of the demand for a particular SKU that is satisfied. For instance, if 100 people go into a PetSmart store to purchase a small Great Choice, portable kennel but only 90 people can make the purchase before the kennel stock is depleted, the product availability for that SKU is 90 percent.

Quiz 11: Managing the Merchandise Planning Process

What is the first step in merchandise management planning?

Which of the following statements about assortment is not True?

________ of a merchandise category is the number of different merchandising subcategories offered.

Garden rakes, lawn mowers, and sunscreen would be considered part of a(n) ________ category.

________ of a retailer's merchandise is the number of SKUs within a subcategory.

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.

Which of the following best describes variety?

Which of the following merchandise systems focuses on staying as close to out of stock as possible?

Which of the following statements does not describe the relationship between product availability and stock level?

Which of the following is True of the forecasting approach for staple merchandise categories?

Which of the following merchandise categories is purchased in a manner similar to fashion merchandise?

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

The ________ is the number of each SKU in the assortment plan that the buyer wants to have available for purchase in each store.

Which of the following statements does not describe the trade-offs that buyers should consider for merchandise assortment planning?

Which of the following terms is defined as the percentage of demand for a particular SKU that is satisfied?

________ is also referred to as the level of support or service level.

Which of the following is not True of fashion merchandise categories?

Which of the following factors does not contribute to the increase of buffer stock levels?

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?

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?