Question 1

Gross margin return on inventory (GMROI)is based on both the retailer's inventory turnover and its profit margin.

Accepted Answer

The answer of Gross margin return on inventory (GMROI)is based...

Question 2

The percentage variation method (PVM)of inventory planning assumes that the percentage fluctuations in monthly stock from average stock should be half as great as the percentage fluctuations in monthly sales from average sales.

Accepted Answer

This statement is true. The percentage variation method (PVM) is a popular inventory planning technique that aims to maintain optimal inventory levels by adjusting stock levels based on the percentage fluctuations in monthly sales and average stock. According to this method, the percentage fluctuations in monthly stock from average stock should be half as great as the percentage fluctuations in monthly sales from average sales. This helps businesses to keep the right amount of inventory on hand to meet customer demand without overstocking or understocking.

Question 3

Employee theft,which amounts to _____ per apprehension,is most prevalent in foods stores,department stores,and discount stores.

Accepted Answer

The answer of Employee theft,which amounts to _____ per apprehension,is...

Question 4

_____ occurs when customers or individuals disguised as customers steal merchandise from the retailer's store.

Accepted Answer

Customer theft is the act of stealing merchandise from the retailer's store by customers or individuals disguised as customers. Vendor collusion refers to when the vendor works with the retailer's employees to steal merchandise, vendor theft is the act of stealing by the vendor itself, shorting refers to the act of decreasing the amount of merchandise received, and employee theft is the act of stealing by the retailer's employees.

Question 5

A buyer is given cash discount terms of 3/10,net 30,MOM.The invoice for the goods is dated May 14.When will the discount period expire?

Accepted Answer

The discount period expires 10 days after the invoice date, which is May 14. Therefore, the discount period ends on May 24. However, since May 24 is not an option, the closest available date after May 24 is May 25.

Question 6

Service retailers can stockpile inventories in anticipation of future demand.

Accepted Answer

Service retailers do not stockpile inventories as their offerings are primarily intangible and perishable, making it difficult to hold inventory.

Question 7

Generally,the weeks' supply method (WSM)of inventory planning works best when used by retailers who have stable sales from week to week.

Accepted Answer

The weeks' supply method assumes consistent sales patterns, making it most effective for retailers with stable sales from week to week.

Question 8

If delivery terms are FOB factory,who would be responsible for the transportation charges?

Accepted Answer

FOB factory means that the seller (vendor) is responsible for the goods until they leave the factory. Once the goods leave the factory, the responsibility and cost of transportation and insurance fall on the buyer. Therefore, the buyer is responsible for transportation charges in FOB factory terms.

Question 9

A _____ discount is one that a vendor provides a retailer for running a special promotion for a manufacturer.

Accepted Answer

A promotional discount is specifically designed to encourage retailers to run special promotions for a manufacturer. This is different from an advertising rebate, which is a discount given to a retailer for advertising a specific product in their store. Psychological discounts are based on perception and may not actually result in a reduction in price, while a special discount is a broad term that doesn't necessarily relate to a specific promotion. A cash discount refers to a reduction in price for paying with cash instead of credit.

Question 10

When comparing customer theft and employee theft,which of the following statements is false?

Accepted Answer

The average amount of merchandise recovered from a shoplifter is not over $500. It varies based on the location and type of store.

Question 11

The basic stock method (BSM)of inventory planning is most useful when a retailer has a low turnover rate or when sales are erratic.

Accepted Answer

The basic stock method (BSM) is designed for retailers with low turnover rates or erratic sales patterns, so it is most useful in those situations.

Question 12

_____ occurs when an employee of one of the retailer's vendors steals merchandise as it is delivered to the retailer.

Accepted Answer

The answer of _____ occurs when an employee of one...

Question 13

Ten days before Halloween,your local candy wholesaler puts all of its Halloween candy on sale.This is an example of which type of discount?

Accepted Answer

The discount is offered specifically for Halloween which is a seasonal event.

Question 14

Inventory is the largest investment a retailer makes.

Accepted Answer

Inventory is the largest investment a retailer makes as it directly affects the ability to generate sales and profits.

Question 15

_____ allows the retailer to pay the invoice in advance of the end of the cash period and earn an extra discount.

Accepted Answer

Anticipation allows the retailer to pay the invoice in advance of the end of the cash discount period and earn an extra discount. This practice encourages early payment, benefiting both the retailer through additional savings and the supplier through improved cash flow.

Question 16

A cash discount is quoted to a retailer as 3/10,net 60.This means that:

Accepted Answer

The notation 3/10, net 60 means that the retailer can receive a 3% discount if the bill is paid within 10 days, otherwise the full amount is due within 60 days. Therefore, option C is the correct answer.

Question 17

A _____ is based on the total amount purchased during a single purchasing event.

Accepted Answer

The answer of A _____ is based on the total...

Question 18

It is important for anyone considering a career in retailing to understand merchandise management,since all retailing jobs have some contact with the firm's merchandising activities.

Accepted Answer

Understanding merchandise management is important for all retailing jobs because they all have some connection to the merchandising activities of the company.

Question 19

When a manufacturer quotes the same price for the same merchandise to buyers in Cleveland,Ohio; Los Angeles,California; and Orlando,Florida the manufacturer is probably quoting the retailers a _____ price.

Accepted Answer

FOB destination pricing means the seller pays for the transportation of the goods to the destination point and charges the same price for the product regardless of the delivery location. This ensures that buyers in Cleveland, Ohio; Los Angeles, California; and Orlando, Florida would pay the same price for the merchandise.

Question 20

A vendor offers a retailer "FOB shipping point" terms.This means that the retailer must pay:

Accepted Answer

FOB shipping point means that the ownership and responsibility of the goods transfer from the vendor to the retailer at the shipping point. Therefore, the retailer is responsible for the transportation costs from the shipping point.

Quiz 9: Merchandise Buying and Handling