Podcast
Questions and Answers
Increasing sales by offering more breadth and depth can potentially reduce inventory turnover.
Increasing sales by offering more breadth and depth can potentially reduce inventory turnover.
True (A)
SKU rationalization programs can help in increasing inventory turnover without reducing sales.
SKU rationalization programs can help in increasing inventory turnover without reducing sales.
True (A)
What is the number of each SKU that the buyer wants to have available for purchase in each store?
What is the number of each SKU that the buyer wants to have available for purchase in each store?
- Order point
- Model stock plan (correct)
- Stock-to-sales ratio
- Merchandise budget plan
- Assortment plan
Which term is defined as the percentage of demand for a particular SKU that is satisfied?
Which term is defined as the percentage of demand for a particular SKU that is satisfied?
What is also referred to as the level of support or service level?
What is also referred to as the level of support or service level?
If a store sells 120 Santa items out of 150 customers, what is its service level?
If a store sells 120 Santa items out of 150 customers, what is its service level?
Which statement does NOT describe the relationship between product availability and stock level?
Which statement does NOT describe the relationship between product availability and stock level?
Which factors does NOT contribute to the increase of buffer stock levels?
Which factors does NOT contribute to the increase of buffer stock levels?
Which term describes inventory for which the level goes up and down in response to the replenishment process?
Which term describes inventory for which the level goes up and down in response to the replenishment process?
Which statement does NOT describe the approach that deals with cycle (base) stock?
Which statement does NOT describe the approach that deals with cycle (base) stock?
What do retailers have to carry since sales and merchandise arrival cannot be predicted with perfect accuracy?
What do retailers have to carry since sales and merchandise arrival cannot be predicted with perfect accuracy?
To alleviate the probability of running out of muffin pans, what should the retailer maintain?
To alleviate the probability of running out of muffin pans, what should the retailer maintain?
Which factor does NOT determine the level of required backup stock?
Which factor does NOT determine the level of required backup stock?
What is the amount of time between recognizing that an order needs to be placed and when the merchandise arrives call?
What is the amount of time between recognizing that an order needs to be placed and when the merchandise arrives call?
What is the percentage of SKUs received complete on a particular order from a vendor called?
What is the percentage of SKUs received complete on a particular order from a vendor called?
The retailer's information system determines the _____ by comparing the sales made through the POS terminals with the shipments received by the store.
The retailer's information system determines the _____ by comparing the sales made through the POS terminals with the shipments received by the store.
What indicates the decision variables set by the buyer, such as product availability and backup stock needed?
What indicates the decision variables set by the buyer, such as product availability and backup stock needed?
In staple merchandise management systems, what is the amount of inventory that should not go below to avoid stockouts?
In staple merchandise management systems, what is the amount of inventory that should not go below to avoid stockouts?
The merchandise budget plan specifies the level of inventory needed to support the sales.
The merchandise budget plan specifies the level of inventory needed to support the sales.
What is used to keep track of actual merchandise flows?
What is used to keep track of actual merchandise flows?
An open-to-buy system compares the planned and actual end-of-month inventory.
An open-to-buy system compares the planned and actual end-of-month inventory.
What's the next step after developing a plan for managing merchandise within a category?
What's the next step after developing a plan for managing merchandise within a category?
According to annual sales classification of stores, which store type has the largest sales volume?
According to annual sales classification of stores, which store type has the largest sales volume?
What must retailers consider during difficult economic times in their allocation decisions?
What must retailers consider during difficult economic times in their allocation decisions?
What involves analyzing performance and making adjustments after developing a plan and allocating merchandise?
What involves analyzing performance and making adjustments after developing a plan and allocating merchandise?
Which analysis technique compares actual and planned sales to determine merchandise needs?
Which analysis technique compares actual and planned sales to determine merchandise needs?
What identifies the performance of individual SKUs in the assortment plan?
What identifies the performance of individual SKUs in the assortment plan?
What does the 80-20 principle imply in retail?
What does the 80-20 principle imply in retail?
The SKUs in a merchandise category are rank-ordered by several performance measures.
The SKUs in a merchandise category are rank-ordered by several performance measures.
What method for evaluating vendors uses a weighted-average score for each vendor?
What method for evaluating vendors uses a weighted-average score for each vendor?
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?
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?
The highest classification level in a buying organization is the _____
The highest classification level in a buying organization is the _____
A merchandise group of a retailer is managed by a _____
A merchandise group of a retailer is managed by a _____
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?
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?
The second highest level in the merchandise classification structure is the _____
The second highest level in the merchandise classification structure is the _____
Which of the following statements is NOT true of a department in the merchandise classification scheme?
Which of the following statements is NOT true of a department in the merchandise classification scheme?
Which of the following statements is NOT true of the merchandise classification scheme?
Which of the following statements is NOT true of the merchandise classification scheme?
A _____ is a group of items targeting the same customer type, such as girls' sizes 4 to 6.
A _____ is a group of items targeting the same customer type, such as girls' sizes 4 to 6.
Which of the following products is an example of a classification?
Which of the following products is an example of a classification?
Which of the following statements is true of a merchandise category?
Which of the following statements is true of a merchandise category?
Which of the following products is NOT an example of a stock-keeping unit (SKU)?
Which of the following products is NOT an example of a stock-keeping unit (SKU)?
A _____ is the basic unit of analysis for making merchandise management decisions.
A _____ is the basic unit of analysis for making merchandise management decisions.
A(n) _____ is the smallest unit available for inventory control.
A(n) _____ is the smallest unit available for inventory control.
Which of the following is NOT true of category management?
Which of the following is NOT true of category management?
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?
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?
What is the drawback of utilizing category captains?
What is the drawback of utilizing category captains?
Why are vendors in a better position to manage a category than a smaller retailer?
Why are vendors in a better position to manage a category than a smaller retailer?
Which of the following statements is NOT true of a potential problem with appointing vendors as category captains?
Which of the following statements is NOT true of a potential problem with appointing vendors as category captains?
A performance measure which assesses a buyer's contribution to ROA is called the _____
A performance measure which assesses a buyer's contribution to ROA is called the _____
When there is a high inventory turnover, there is an increase in sales because:
When there is a high inventory turnover, there is an increase in sales because:
Which of the following is NOT a benefit of a high inventory turnover?
Which of the following is NOT a benefit of a high inventory turnover?
Which of the following is a consequence of a high inventory turnover?
Which of the following is a consequence of a high inventory turnover?
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.
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.
Which of the following is an example of staple merchandise?
Which of the following is an example of staple merchandise?
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 _____
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 _____
_____ consist of items that are only in demand for a relatively short period of time.
_____ consist of items that are only in demand for a relatively short period of time.
Which of the following is NOT true of a fashion merchandise category?
Which of the following is NOT true of a fashion merchandise category?
Which of the following is NOT true of staple merchandise categories?
Which of the following is NOT true of staple merchandise categories?
Which of the following statements holds true for the purchase of staple merchandise?
Which of the following statements holds true for the purchase of staple merchandise?
_____ categories consist of items whose sales fluctuate dramatically depending on the time of year.
_____ categories consist of items whose sales fluctuate dramatically depending on the time of year.
Garden rakes, lawn mowers, and sunscreen would be considered part of a(n) _____ category.
Garden rakes, lawn mowers, and sunscreen would be considered part of a(n) _____ category.
Which of the following is NOT true of fashion merchandise categories?
Which of the following is NOT true of fashion merchandise categories?
Which of the following merchandise systems focuses on staying as close to out of stock as possible?
Which of the following merchandise systems focuses on staying as close to out of stock as possible?
Which of the following merchandise categories is purchased in a manner similar to fashion merchandise?
Which of the following merchandise categories is purchased in a manner similar to fashion merchandise?
What is the first step in merchandise management planning?
What is the first step in merchandise management planning?
Which of the following is true of the forecasting approach for staple merchandise categories?
Which of the following is true of the forecasting approach for staple merchandise categories?
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?
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(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(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 best describes variety?
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 _____
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 _____
_____ of a retailer's merchandise is the number of SKUs within a subcategory.
_____ of a retailer's merchandise is the number of SKUs within a subcategory.
_____ of a merchandise category is the number of different merchandising subcategories offered.
_____ of a merchandise category is the number of different merchandising subcategories offered.
Which of the following statements about assortment is NOT true?
Which of the following statements about assortment is NOT true?
Flashcards
Merchandise Management
Merchandise Management
Ensuring retailers have the right products in the right quantity to meet financial goals.
Merchandise Group
Merchandise Group
The highest level in product classification, managed by a General Merchandise Manager (GMM).
Department
Department
Managed by a Divisional Merchandise Manager (DMM), it's the level below merchandise group.
Stock-Keeping Unit (SKU)
Stock-Keeping Unit (SKU)
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Classification
Classification
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Merchandise Category
Merchandise Category
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Staple Merchandise
Staple Merchandise
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Fashion Merchandise
Fashion Merchandise
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Inventory Turnover
Inventory Turnover
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Seasonal Merchandise
Seasonal Merchandise
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Category Manager
Category Manager
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Category Captains
Category Captains
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Product Availability
Product Availability
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Assortment
Assortment
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Service Level
Service Level
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Backup Stock
Backup Stock
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Buffer Stock Influencing Factors
Buffer Stock Influencing Factors
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Cycle Stock
Cycle Stock
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Lead Time
Lead Time
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Fill Rate
Fill Rate
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Perpetual Inventory
Perpetual Inventory
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Order Point
Order Point
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Merchandise Budget Plan
Merchandise Budget Plan
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Open-to-Buy Systems
Open-to-Buy Systems
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Merchandise Allocation
Merchandise Allocation
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Sell-Through Analysis
Sell-Through Analysis
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ABC Analysis
ABC Analysis
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Multiattribute Analysis
Multiattribute Analysis
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Study Notes
Merchandise Management
- Merchandise management ensures retailers have the right quantity and type of products available while achieving financial goals.
- It operates under various classifications to organize products effectively.
Merchandise Classification Structure
- Highest classification level is the merchandise group, followed by department, classification, category, and stock-keeping unit (SKU).
- A general merchandise manager (GMM) oversees each merchandise group, while a divisional merchandise manager (DMM) manages departments.
Stock-Keeping Units (SKUs)
- SKUs represent the smallest inventory control unit, often defined by attributes like size, color, and style.
- Examples of SKUs include specific clothing sizes and product variations.
Categories and Classifications
- A classification groups items targeting the same customer type, while a merchandise category forms the basic unit for merchandising decisions.
- Staple merchandise consists of frequently purchased items, whereas fashion merchandise has a shorter sales lifespan and demands forecasting due to changing trends.
Inventory Management
- High inventory turnover indicates better sales as new products are regularly introduced to consumers.
- Benefits of high inventory turnover include available new merchandise and improved employee morale but may also present risks like increased markdowns.
Merchandise Types
- Staple merchandise inflates demand over extended periods, while seasonal merchandise exhibits fluctuating sales based on the time of year.
- Fashion merchandise is characterized by its short lifecycle and continual introduction of new styles, making sales forecasting more complex.
Category Management
- A category manager oversees product categories to optimize sales and space within a store, yet may face challenges like vendor dominance in proposed assortment strategies.
- Engaging category captains (vendors with strategic alliances) can enhance category efficiency but also poses risks of product bias and favoritism.
Forecasting Sales
- Accurate forecasting for staple merchandise relies on historical sales data rather than speculative methods like focus groups.
- Buyers must balance inventory with demand by employing continuous replenishment systems.
Product Availability and Assortment
- Product availability refers to the fulfillment of customer demand for SKUs, akin to service levels within inventory context.
- Assortment planning necessitates a strategic approach, weighing the breadth and depth of available products against customer preferences and market trends.
Service Levels
- Service level quantifies the percentage of demand fulfilled, assessing retailer efficiency in stock management.
Learning Points
- Understanding the hierarchy in merchandise classifications helps buyers make informed decisions.
- Successful merchandise management involves a balance between maintaining a desirable assortment and ensuring product availability based on consumer needs.### Inventory Management and Backup Stock
- Increased backup stock enhances product availability for retailers.
- Backup stock quantity remains fixed and is not influenced by product availability.
- Excessive product availability incurs high inventory costs, diverting funds from enhancing product variety.
- High product availability can lead to substantial inventory investments.
Buffer Stock Influencing Factors
- High service levels, fluctuating demand, long vendor lead times, and variations in lead time increase buffer stock.
- Frequent store deliveries do not contribute to increased buffer stock levels.
Stock Types
- Cycle stock fluctuates based on replenishment processes.
- Backup stock serves as a safety net due to unpredictable sales and delivery times.
Order Management
- Retailers maintain backup stock to prevent stockouts during varying sales periods.
- Lead time describes the duration between order placement and merchandise arrival.
- Fill rate measures the percentage of complete SKUs received in an order.
Inventory Tracking and Control
- Perpetual inventory is derived from POS sales data and inventory shipments.
- Inventory management reports assist buyers in decision-making concerning stock levels and order quantities.
- Order point indicates the minimum inventory level before a stockout may occur.
Merchandise Planning
- The merchandise budget plan specifies the necessary inventory levels to support sales goals.
- Open-to-buy systems track current inventory levels, deliveries, and sales statistics.
- Comparison of planned and actual end-of-month inventory identifies discrepancies in merchandise management.
Allocation and Performance Analysis
- Post-planning, merchandise allocations to stores are essential for efficient management.
- Retailers classify stores based on annual sales for better inventory distribution.
- Performance adjustments occur through analysis after merchandise allocation.
Sales Analysis Techniques
- Sell-through analysis compares actual sales against planned expectations to evaluate inventory needs.
- ABC analysis ranks SKUs based on performance, with the 80-20 principle indicating that a small percentage of products drives most sales.
Vendor Evaluation
- Multiattribute analysis scores vendors based on various performance criteria to facilitate informed decision-making.
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