Chapter 12 practice – Flashcards
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Buyers, divisional merchandise managers, and general merchandise managers are some of those who undertake the responsibilities of merchandise management.
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TRUE
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The highest classification level in the buying organization is the merchandise category.
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FALSE
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Fashion merchandise consists of items that are in continuous demand over an extended time period.
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FALSE
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Seasonal merchandise consists of items whose sales fluctuate dramatically depending on the time of the year.
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TRUE
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An 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.
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TRUE
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Assortment, or depth, of a merchandise category is the number of different merchandising subcategories offered.
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FALSE
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Buyers need not compromise on breadth or depth of merchandise to increase product availability.
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FALSE
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Shorter lead times result in a higher level of backup stock required to maintain the same level of product availability.
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FALSE
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The quantity of merchandise has a bigger impact on profitability than allocation decisions.
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FALSE
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An ABC analysis identifies the performance of individual SKUs in the assortment plan.
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TRUE
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Which of the following is the process by which a retailer attempts to offer the appropriate quantity of the right merchandise, in the right place and at the right time while meeting the company's financial goals?
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Merchandise management
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The highest classification level in a buying organization is the _____.
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merchandise group
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A merchandise group of a retailer is managed by a _____.
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general merchandise manager (GMM)
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Which of the following schemes is the correct order describing the levels of the merchandise classification scheme from the highest level to the lowest level?
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Merchandise Group-Department-Classification-Category-SKU
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The second highest level in the merchandise classification structure is the _____.
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department
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Which of the following statements is NOT true of a department in the merchandise classification scheme?
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It is managed by a general merchandise manager (GMM).
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Which of the following statements is NOT true of the merchandise classification scheme?
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SKUs are the basic units of analysis for making merchandising management decisions.
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A _____ is a group of items targeting the same customer type, such as girls' sizes 4 to 6.
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classification
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Which of the following products is an example of a classification?
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Infant apparel
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Which of the following statements is true of a merchandise category?
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It is the basic unit of analysis for merchandising decisions.
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Which of the following products is NOT an example of a stock-keeping unit (SKU)?
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Teen necklaces with matching bracelets and rings
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A _____ is the basic unit of analysis for making merchandise management decisions.
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merchandise category
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A(n) _____ is the smallest unit available for inventory control.
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stock-keeping unit
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Which of the following is NOT true of category management?
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A category manager is also called a category captain and works with vendors to get the most profit from collaborative relationships.
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Which of the following persons is a vendor who forms an alliance with a retailer to help gain consumer insight, satisfy customer needs, and improve performance and profit across a category?
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Category captain
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What is the drawback of utilizing category captains?
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The vendor category captain could take advantage of their position and maximize their own sales.
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Why are vendors in a better position to manage a category than a smaller retailer?
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Vendors have superior information through their focus on a specific category.
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Which of the following statements is NOT true of a potential problem with appointing vendors as category captains?
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Appointing vendors as category captains makes merchandise management tasks difficult for retailers.
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A performance measure which assesses a buyer's contribution to ROA is called the _____.
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gross margin return on investment
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When there is a high inventory turnover, there is an increase in sales because:
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new merchandise is continually available to customers.
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Which of the following is NOT a benefit of a high inventory turnover?
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Reduced gross margin
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Which of the following is a consequence of a high inventory turnover?
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Improved employee morale
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Merchandise like men's crew socks, canned peas, college ruled loose leaf paper, and 60-watt light bulbs would be considered _____ that are in continuous demand over an extended time period.
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staple merchandise
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Which of the following is an example of staple merchandise?
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Men's black socks
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Smart Wash is a popular brand of detergent powder. The stock needs to be continuously replenished in stores and supermarkets due to its high demand. The detergent powder belongs to the category of _____.
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staple merchandise
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_____ consist of items that are only in demand for a relatively short period of time.
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Fashion merchandise categories
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Which of the following is NOT true of a fashion merchandise category?
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Forecasting sales for this category is simplistic and predictable.
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Which of the following is NOT true of staple merchandise categories?
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Because their sales are relatively steady from day-to-day, periodic inventory system is used.
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Which of the following statements holds true for the purchase of staple merchandise?
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Staple merchandise is purchased using a continuous replenishment system by monitoring sales and generating replacement orders.
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_____ categories consist of items whose sales fluctuate dramatically depending on the time of year.
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Seasonal merchandise
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Garden rakes, lawn mowers, and sunscreen would be considered part of a(n) _____ category.
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seasonal merchandise
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Which of the following is NOT true of fashion merchandise categories?
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Buyers for fashion merchandise categories have a high degree of flexibility in correcting forecasting errors.
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Which of the following merchandise systems focuses on staying as close to out of stock as possible?
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Fashion merchandise management system
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Which of the following merchandise categories is purchased in a manner similar to fashion merchandise?
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Seasonal merchandise
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What is the first step in merchandise management planning?
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Developing a forecast for sales
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Which of the following is true of the forecasting approach for staple merchandise categories?
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Forecasts are typically based on extrapolating historical sales.
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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?
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In-depth interview
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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.
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focus group
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Which of the following best describes variety?
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The number of different merchandising subcategories within a store
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Father Christmas is a retail store in Georgia that sells a unique Santa made from fur, wool, and tapestry. The store does not sell any other product. Therefore, the store has no _____.
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variety
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_____ of a retailer's merchandise is the number of SKUs within a subcategory.
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Assortment
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_____ of a merchandise category is the number of different merchandising subcategories offered.
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Variety
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Which of the following statements about assortment is NOT true?
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Offering a large assortment normally simplifies a customer's buying decision.
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Which of the following statements does NOT describe the trade-offs that buyers should consider for merchandise assortment planning?
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SKU rationalization programs can help in increasing inventory turnover without reducing sales.
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The _____ is the number of each SKU in the assortment plan that the buyer wants to have available for purchase in each store.
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model stock plan
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Which of the following terms is defined as the percentage of demand for a particular SKU that is satisfied?
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Product availability
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_____ is also referred to as the level of support or service level.
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Product availability
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Father Christmas is a retail store in Georgia 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?
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80 percent
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Which of the following statements does NOT describe the relationship between product availability and stock level?
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The quantity of backup stock is fixed by a retailer and is not influenced by product availability.
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Which of the following factors does NOT contribute to the increase of buffer stock levels?
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Frequent store deliveries
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_____ refers to inventory for which the level goes up and down in response to the replenishment process.
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Cycle stock
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Which of the following statements does NOT describe the approach which deals with cycle (base) stock?
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Frequent orderings with smaller quantities will reduce transportation costs.
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Since sales and the arrival of merchandise from vendors can't be predicted with perfect accuracy, retailers have to carry _____.
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backup stock
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A catalog retailer of kitchen items observes that during some weeks it sells 40 muffin pans, and during other weeks it sells none. A reorder takes up to three weeks. The probability of running out of pans and alienating its customers can be alleviated by maintaining _____.
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backup stock
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Which of the following is NOT a factor that determines the level of required backup stock?
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Price of the product
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_____ is the amount of time between the recognition that an order needs to be placed and the point at which the merchandise arrives in the store and is ready for sale.
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lead time
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The percentage of SKUs received complete on a particular order from a vendor is called the _____.
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fill rate
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The retailer's information system determines the _____ by comparing the sales made through the POS terminals with the shipments received by the store.
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perpetual inventory
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A(n) _____ indicates the decision variables set by the buyer, such as product availability, the backup stock needed to provide the product availability, and the order points and quantities.
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inventory management report
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In staple merchandise management systems, the _____ is the amount of inventory below which the quantity available shouldn't go or the item will be out of stock before the next order arrives.
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order point
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The merchandise budget plan:
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specifies the level of inventory needed to support the sales.
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A(n) _____ is used to keep track of the actual merchandise flows—what the present inventory level is, when purchased merchandise is scheduled for delivery, and how much has been sold to customers.
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open-to-buy system
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An open-to-buy system compares:
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the planned and actual end-of-month inventory.
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After developing a plan for managing merchandise within a category, the next step in the merchandise management process is to:
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allocate the merchandise to the stores.
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Retail chains typically classify each of their stores on the basis of annual sales. According to this classification, _____.
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A stores would have the largest sales volume
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Which of the following factors is considered by retailers in making merchandise allocation and promotion decisions specific to difficult economic times?
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Paycheck cycle
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After developing a plan and allocating the merchandise, the next step in the merchandise planning process involves:
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analyzing the performance and making adjustments.
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Which of the following analysis techniques compares actual and planned sales to determine whether more merchandise is needed to satisfy demand or whether price reductions are required?
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Sell-through analysis
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A(n) _____ identifies the performance of individual SKUs in the assortment plan.
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ABC analysis
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Retailers often find the 80-20 principle evident within the ABC analysis. What does the 80-20 principle imply?
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Approximately 80 percent of a retailer's sales come from 20 percent of its products.
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Which of the following statements is true of the ABC analysis?
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The SKUs in a merchandise category are rank-ordered by several performance measures.
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The _____ method for evaluating vendors uses a weighted-average score for each vendor.
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multiattribute analysis
