Which of the following statements is not true of the merchandise classification scheme?

1. How can the use of an EDLP strategy increase a retailer's profit margin?
A. EDLP reduces the retailer operating expenses because employees don't have to spend time continually making price changes.
B. EDLP increases the large variations in demand caused by frequent sales.
C. Employees provide less customer service because of the sale-stimulated throngs of people.
D. The stable prices caused by EDLP require the use of more weekly advertising.

2. For most of the past century, Sears enjoyed the success of Craftsman brand tools. Since Sears
communicates the brand's durability through advertisement, performance and guarantees, Craftsman is the
leading brand of choice for consumers interested in purchasing tools. Which of the following statements
best describes Sears' communication program?
A. Advertising alone was the strategy for Craftsman's success.
B. Sears created a short-term objective of increasing sales.
C. Positive publicity single-handedly lifted Sears out of the marketing slump it had been experiencing for the past decade.
D. Sears created and maintained a long-term communication program about the Craftsman brand.

3. The multiattribute analysis method uses a weighted average to
A. assess transportation costs.
B. evaluate vendors.
C. determine inventory needs.
D. determine the best discount methodology.

4. Sports Authority anticipates running a print advertisement campaign during the beginning of the year in
support of customer's anticipated New Year's resolutions to get in physical shape. Sports Authority asks
their key vendors to partner with them in covering the expenses of the ad campaign. Vendors agree to
support the _______ as long as they are certain that their products will be featured in the advertisements.
A. spot promotion
B. partnering promotions
C. double pocket promotion
D. co-op advertising

5. How do buying staple merchandise categories differ from buying fashion merchandise categories?
A. The staples buying system requires more experienced buyers.
B. Monitoring sales and generating replacement orders with continuous replenishment is used for staple merchandise.
C. Standard statistical techniques are used when buying fashion merchandise categories.
D. Buyers forecast sales at the category level for staple merchandise.

6. Janessa prefers high-end cosmetics but also likes a good deal. She only purchases her make-up at
department stores when they have a gift with purchase. Today she saw at Macy's that if she buys $35
worth of Lancôme cosmetics she would receive a gift with purchase. This gift with purchase is a form of
what kind of sales promotion?
A. Special event
B. Rebate
C. Premium
D. Sample

7. Best Buy originally priced a private-label portable DVD player at $99, and then sold 1,200 units per
week. After raising the price to $120, sales dropped to 1,000 units per week. What would the item's price
elasticity be?
A. 2.4005
B. –0.7855
C. –3
D. –2.4005

8. The retail price of a sweater is $75 and the initial markup is 51 percent. Calculate the cost of the
product.
A. $25.71
B. $28.50
C. $33.75
D. $36.75

9. Andrea wants to build top of the mind awareness for her nail shop. The best way for her to develop this
awareness would be to
A. teach nail design classes.
B. offer better customer service and good publicity will naturally spread.
C. repeatedly expose customers to the name of the shop through advertising.
D. partner with her vendors to bring great merchandise into the store.

10. When marketers will ask questions and seek options of consumers about products from a group of
teenagers, this would be an example of a/an
A. focus group.
B. mall intercept participant.
C. source of secondary information.
D. on-site surveying tool.

11. Which of the following analyses compares actual to planned sales so buyers know to buy more
merchandise or markdown existing merchandise?
A. GMROI
B. Inventory turnover analysis
C. ABC analysis
D. Sell-through analysis

12. Which of the following statements does not describe the approach that deals with cycle (base) stock?
A. One approach for reducing the base stock is to reorder and receive merchandise from the vendor more often.
B. Shorter delivery time from the vendor will reduce the level of base stock.
C. More frequent orderings with smaller quantities will reduce transportation costs.
D. A retailer tries to reduce the base stock to keep its inventory investment low.

13. Which of the following is not descriptive of a trade show?
A. Buyers review performance of the vendor during the previous season.
B. Vendors have celebrities at their booth to promote their merchandise and attract buyers.
C. Buyers meet with manufacturer executives to discuss strategies to grow their business.
D. The public is encouraged to attend and check out the new products that will soon be offered at retail.

14. The merchandise cost from the vendor for an MP3 player is $82.50, and the retailer who is selling the
device wants to use an initial markup percentage of 67 percent. Calculate the initial retail price.
A. $55
B. $272
C. $250
D. $123

15. Which of the following factors does not contribute to the increase of buffer stock level?
A. Long lead time for delivery from the vendor
B. Frequent store deliveries
C. Fluctuations in vendor lead time
D. High fluctuations in demand

16. Which of the following statements about the merchandise classification scheme is false?
A. The highest classification level is the merchandise group.
B. A Stocking-Keeping Unit (SKU) is the smallest unit available for inventory control.
C. In soft goods, a SKU usually means a particular size, color, and style.
D. A SKU is the basic unit of analysis for making merchandising management decisions.
17. Frankie is a buyer for a department store and is buying some handbags at a cost of $30 from a vendor.
He desires to have a 60 percent markup to meet the financial goals of this category. What will the retail
price be of these handbags?
A. $50
B. $40
C. $75
D. $60
End of exam

18. What is the first step in merchandise management planning?
A. Develop a business plan
B. Developing a forecast for sales
C. Determine the appropriate inventory levels
D. Execution of the plan

19. The _______ is a method of rank-ordering SKUs based on performance measures, to make inventory
stocking decisions.
A. sell-through analysis
B. inventory turnover ranking
C. product rating system
D. ABC analysis

20. Louise runs a successful shop in Chicago featuring one-of-a-kind dolls from Western Europe. Louise
speaks German and a little Dutch, but no Italian, French or Spanish. How can she best buy dolls from all
European nations, and maintain her unique assortments?
A. Louise can utilize a resident buying office when she visits Europe to buy.
B. Louise can visit wholesale market centers throughout the year.
C. Louise can attend trade shows in the United States and meet vendors there.
D. Louise can establish a time for vendors to visit her in her own office.