Retail Management 12 – Flashcards
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Merchandise Management
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process in which retailers attempt to offer the appropriate quantity of the right merchandise, in the right place at the right time, so that it can meet the company's financial goals
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Merchandise Group
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Highest classification level of Merchandise Classifications and Organization Chart
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Department
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Second level of merchandise classification sceme
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Classification
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Third level for categorizing merchandise and organizing merchandise management activities
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Stock-keeping Unit (SKU)
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is the smallest unit available for inventory control
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merchandise category
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an assortment of items that customers see as substitutes for one anoter
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Category management
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approach to managing merchandise assigns one buyer or category manager to oversee all merchandising activities for t he entire category
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Category Captain
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when a vendor works with a retailer to develop a better understanding of consumer shopping behaviors, create assortments that satisfy consumer needs, and improve the profitability of the merchandise category.
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Gross Margin Return on Inventory Investment (GMROI)
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Gross margin percentage x Sales-to-stock ratio = Gross Margin/Net Sales x Nets Sales/ Average Inventory at Cost = Gross Margin/ Average Inventory At Cost
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Merchandise Planning Process
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Forecast category sales Develop an assortment plan Determine appropriate inventory level and product availability Develop a plan for managing inventory Allocate merchandise for stores Buy merchandise Monitor and evaluate performance and make adjustments
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Staple Merchandise (basic merchandise)
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categories that are in continuous demand over an extended time period.
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Continuous Replenishment
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Systems involve continuously monitoring merchandise sales and generating replacement orders, often automatically, wen inventory levels drop below predetermined levels
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The inventory level at each point in time is known as the ______ inventory, is determined by comparing the sales made through the point-of-sale terminals with the shipments received by the store
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perpetual
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Which of the following is an attribute of fashion merchandise categories
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Buyers for fashion merchandise categories have must less flexibility in correcting forecasting errors
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Merchandise planning systems for staple merchandise categories often involve continuous replenishment systems because
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the demand patterns for staple merchandise are very predictable
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Fashion merchandise
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categories are in demand only for a relatively short period of time. New products are continually introduced into these categories
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Seasonal Merchandise
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consist of items whose sales fluctuate dramatically depending on the time of the year
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In-depth review
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is an unstructured personal interview in which the interviewer uses extensive probing to get individual respondents to talk in detail about a subject. For example, one grocery store chain goes through personal checks received each day to identify customers to interview
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Retailers use to develop forecasts for fashion merchandise categories
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1. previous sales data 2. market research 3. fashion and trend services 4. vendors
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Focus group
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is a small group of respondents interview by a moderator using a loosely structured format. Participation is encouraged to express their views and comments on the views of others in the group
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Assortment Plan
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is the set of SKUs that a retailer will offer in a merchandise category in each of its stores and from its website
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variety
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or breadth, of merchandise category is the number of difference merchandising subcategories offered
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assortment
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or depth, of merchandise is the number of SKUs within a subcategory
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editing the assortment
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the process of determining the variety and assortment of a category
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Typically, in order to increase the gross margin, retailers are
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increasing the price of products
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breaking sizes refers to
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the stocking out of a specific size or color stock-keeping unit
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breaking sizes
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stocking out of a specific size or category and the buyer cannot reorder during the season, the buyer will typically discount the entire merchandise type
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SKU rationalization programs
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is retailer's effort to analyze the benefits they might gain from deleting, adding, or keeping certain items in their assortments.
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model stock plan
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number of each SKU in the assortment plan that they buyer wants to have available for purchase in each store.
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Backup Stock
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called buffer or safety stock is the model stock plan determines product availability
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Product availability
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percentage of the demand for a particular SKU that is satisfied. 100 people go into PetSmart store to purchase a small portable kennel but only 90 people can make the purchase before the kennel stock is depleted.
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Level of Support
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or service level is referred to as product availability
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Cyle Stock
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or base stock is when inventory levels go up and down due to the replenishment process
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Lead time
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is the amount of time between 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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Fill Rate
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percentage of SKY's received complete on a particular order from a vendor
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Perpetual Inventory
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information system determines the inventory level at each point in time
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The inventory turnover and stock-sales-ratio of a merchandise category are 4.0 and 5.0, respectively. Determine the gross margin percentage of the merchandise category
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20%
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Inventory Turnover
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= (1-gross margin percentage) x sales-to-stock ratio
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factors that affect sales of staple merchandise include the price set for the merchandise in the category and the pricing and promotion of complementary categories
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Controllable
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Order Point
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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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open-to-buy
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system used to keep track of the actual merchandise
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sell-through analysis
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compare actual and planned sales to determine whether more merchandise is needed to satisfy demand or whether price reduction (mark-downs) are required
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markdown
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need to make adjustments depend on a variety of factors, including experience with the merchandise in the past, plans for featuring the merchandise in advertising, and the availability from vendors.
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ABC analysis
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identifies the performance of individual SKUs in the assortment plan. It determines which SKUs should be in the plan and how many backup stock and resulting product availability are provided for each SKU in the plan
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Multiattribute analysis
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method for evaluating vendors uses a weighted-average score for each vendor
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Fred is one of senior vice presidents of Gray House Inc., a chain of department stores. He makes decisions about the management of inventory and oversees the responsibilities of the divisional merchandise managers and buyers. Fred belongs to the ______ in the organization
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Merchandise Group
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The assortment plan reflects the ______ and ______ of merchandise that the retailer plans to offer in a merchandise category
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breadth; depth
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Arrange the steps that buyers use to evaluate vendors in the correct order
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1. Develop a list of issues to consider 2. Determine the importance weights of each issue 3. Make judgments about each individual brand's performance on each issue 4. Develop an overall score by multiplying the importance of each issue by the performance of each brand or its vendor 5. To determine a vendor's overall rating, add the products of each brand for all issues
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When editing the assortment, a buyer does not consider the physical characteristics of the store
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False
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Product ______ is defined as the percentage of the demand for a particular stock-keeping unit that is satisfied
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availability
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is the lowest level in the merchandise classification scheme
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Category
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A(n) _____ system keeps track of 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
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A retailer should
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consider the physical characteristics of the merchandise and the depth of assortment when making allocation decisions for a category
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A(n) _______ unit or SKU is the smallest unit available for inventory control
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stock-keeping
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The _____ is the third level of categorizing merchandise and organizing merchandise management activities.
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classification
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Cycle stock is also called
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base stock
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The sales of staple merchandise categories cannot be affected by factors such as the opening and closing of stores and the price set for the merchandise in the category
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False
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Variety of a retailer's merchandise is also known as the ________ of merchandise
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breadth
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A(n) _____ _____ identifies the performance of individual SKUs in the assorted plan
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ABC analysis
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Buyers must have the ability to sense market trends, analyze sales data continually, and make appropriate adjustments in the price and inventory levels
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True
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_____ the second level in the merchandise classification scheme, are managed by divisional merchandise managers (DMMs)
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departments
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Janet, a buyer for a department store, is looking for information about the latest fashion trends. She should
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spend more time on the selling floor to be attuned to local customers demand
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ROA is not a good measure for evaluating the performance of merchandise managers because they generally
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do not have control over all the assets of a retailer
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The ______ _____ plan specifies the amount of merchandise in dollars (not units) that need to be delivered during each month, based on the sales forecast, the planned discounts to employees and customers, and the level of inventory needed to support the sales and achieve the desired GMROI objectives.
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merchandise budget
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The percentage of complete orders received from a vendor
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Fill rate
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Which of the following is a characteristic of fashion merchandise categories?
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Typically, they are in demand only for a relatively short period of time
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Average inventory at cost =
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Gross Margin/ Gross Margin return on Inventory investment
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Identify the accurate statement about managing merchandise categories.
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Managing merchandise by category can help ensure that a store's assortment includes the best combination of sizes and vendors
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The _____ _____ plan is the number of each stock-keeping unit in the assortment plan that the buyer wants to have available for purchase in each store
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model stock
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The objective of the SKU ________ program is to increase inventory turnover by reducing the number of stock-keeping units without reducing sales
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rationalization
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A retailer needs to carry less backup stock when
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the sales are less than average
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Staple merchandise categories are also called _____ merchandise categories
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basic
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Identify the true statement about the factors that determine the level of backup stock needed for a particular SKU in the staple merchandise category
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Typically, shorter lead times from a vendor results in a lower level of backup stock required to maintain the same level of product availability
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The ______ of merchandise is the number of stock-keeping units within a subcategory offered by retailers to customers
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assortment
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Gross margin return on inventory investment (GMROI) =
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Gross margin percentage x sales-to-stock ratio
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classification
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is a group of items targeting the same customer type
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The ______ is a factor that affects the sales of staple merchandise and cannot be controlled by a retailer.
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special promotional activities by vendors
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The ______ is the highest classification level in the merchandise classification scheme
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merchandise group
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A(n) _____ ____ 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 analsysi
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What should a retailer know about managing fashion merchandise categories?
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The performance evaluations of a category should not be based solely on GMROI, inventory turnover, and sales forecast.
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In an inventory management report, the _____ _____ is the number that tells a buyer that when the inventory levels drop to a certain level, additional merchandise should be ordered.
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order point
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A retailer increasing its merchandise's assortment breadth and depth can result in a decrease in the retailers gross margin
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true
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THe gross margin percentage and gross margin return on inventory investment of a merchandise category are 75%, and 225% respectively. calculate sales-to-stock ratio
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3.0
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Identify the accurate statement about staple merchandise categories
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Sales of staple merchandise are relatively steady week to week
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When a retailer increases the number of SKUs in its assortment plan
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the chances of breaking sizes are greater
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The inventory turnover and gross margin percentage of a merchandise category are 3.5 and 30%. Calculate the sales-to-stock ratio
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5.0
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Buyers do not have control over
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a retailer's operating expenses
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A drawback of offering large assortments is that they
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make the purchase decision more complex and time-consuming and can potentially overwhelm the customer
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The inventory management report provides information about the inventory management for a staple merchandise category
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True
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Service retailers devise approaches for managing demand for their offering to ensure that demand does not exceed capacity
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True
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Buyers reduce number of stock-keeping units within a category to increase their inventory turnover
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True
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merchandise category consist of items whose sales fluctuate dramatically depending on the time of the year.
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seasonal
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The gross margin, average inventory at cost, and net sales of a merchandise category are $250,000, $100,000, and $1,200,000, respectively. Calculate the gross margin return on inventory investment.
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250%
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What does the statement "A merchandise category has a high stock-to-sales ratio." indicate?
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The merchandise category sells quickly in the market
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is used to determine which SKUs should be in the assortment plan and how much backup stock and resulting product availability are provided for each SKU in the plan
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in-depth
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A _____ group 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
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The gross margin return on inventory investment (GMROI) and sales-to-stock ratio of a merchandise category are 175% and 5.0, respectively. Calculate the gross margin percentage.
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35%
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Identify the accurate statement about editing the assortment
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The breadth and depth of the assortment in a merchandise category affects a retailer's brand image
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Geoffrey, a multiattribute retailer, is in the process of developing an assortment plan. He should
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offer a greater assortment through his internet channel to overcome the space limitations of his store
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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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When developing assortment plans,
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buyers need to consider the degree to which categories in a department complement each other
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factors that affect sales of staple merchandise include the weather, general economic conditions, and the new product and pricing activities by competitors
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Uncontrollable
