Question 1

When using FOB destination,the vendor pays the freight and the buyer takes title at the manufacturer's factory.

Accepted Answer

A) True 
 B)False

Question 2

Buyers should always approach vendors with two important pieces of information: the vendor profitability analysis statement and the confidential vendor analysis.

Accepted Answer

A) True 
 B)False

Question 3

A quantity discount based on the total amount purchased over a given period of time is called a cumulative-quantity discount.

Accepted Answer

A) True 
 B)False

Question 4

If the retailer has no purchase commitments for future delivery,then its OTB and planned purchases at retail should be equal.

Accepted Answer

A) True 
 B)False

Question 5

A trade discount of "list less 40-20-10," assuming that the list price is $500,would result in the retailer paying $240.00 for the item.

Accepted Answer

A) True 
 B)False

Question 6

The retailer needs to design the receiving and handling area to minimize theft as this is a high-theft area.

Accepted Answer

A) True 
 B)False

Question 7

The effectiveness of the buyer-vendor relationship depends on the:

Accepted Answer

A)  final negotiated prices. 
B)  negotiation skills of the buyer and the economic power of the firms involved. 
C)  profitability of the line for the retailer. 
D)  method of shipment. 
E)  markdown money.

Question 8

Service retailers can stockpile inventories in anticipation of future demand.

Accepted Answer

A) True 
 B)False

Question 9

Dollar merchandise control over inventory purchases is frequently accomplished through a technique called open to buy.

Accepted Answer

A) True 
 B)False

Question 10

Determine the buyer's BOM for March,using the percentage variation method,based on the following information: planned sales for March = $200,000; total spring sales = $600,000; spring months = 4; inventory turnover = 2.5.

Accepted Answer

A)  $150,000 
B)  $240,000 
C)  $260,000 
D)  $280,000 
E)  $600,000

Question 11

Depth is the average number of SKUs within each brand of the merchandise line.

Accepted Answer

A) True 
 B)False

Question 12

Vendor collusion often involves both a delivery person and a retailer employee with the two splitting the profit.

Accepted Answer

A) True 
 B)False

Question 13

All of the following are methods of dollar merchandise planning EXCEPT:

Accepted Answer

A)  stock-to-sales ratio. 
B)  percentage variation. 
C)  basic stock. 
D)  week's supply. 
E)  valuation turns.

Question 14

The annual cost to retailers for carrying inventory is between 15 to 20 percent.

Accepted Answer

A) True 
 B)False

Question 15

For most retailers,the limited amount of space in their store is a constraining factor on their optimal merchandise mix.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is NOT a formal way of deciding inventory levels?

Accepted Answer

A)  Stock-to-sales ratio 
B)  Gross margin contribution 
C)  Basic stock 
D)  Week's supply 
E)  Percentage variation

Question 17

_____ is when the vendor allows the retailer extra time before payment is due for goods.

Accepted Answer

A)  FOB destination 
B)  Extra dating 
C)  Space reduction 
D)  FOB factory 
E)  Space constraints

Question 18

The shipping arrangement whereby the vendor pays all transportation costs is called FOB shipping point.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A)  The transportation company 
B)  The vendor 
C)  The buyer 
D)  The buyer and the vendor share the expenses 
E)  The final customer

Question 20

The following information is known for a buyer of cosmetics:
$\begin{array} { ll } 
 \text {Planned sales for the month }&\$42,000\
 \text {Planned EOM stock }&\$60,000\
 \text {Planned reductions }&\$4,800\
 \text {BOM inventory }&\$72,000\
 \text { Merchandise commitments for delivery}&\$9,600\
\end{array}$

What is the cosmetic department's open-to-buy at retail?

Accepted Answer

A)  $10,000 
B)  $25,200 
C)  $32,400 
D)  $34,800 
E)  $38,600

Exam 9: Merchandise Buying and Handling

When using FOB destination,the vendor pays the freight and the buyer takes title at the manufacturer's factory.

Buyers should always approach vendors with two important pieces of information: the vendor profitability analysis statement and the confidential vendor analysis.

A quantity discount based on the total amount purchased over a given period of time is called a cumulative-quantity discount.

If the retailer has no purchase commitments for future delivery,then its OTB and planned purchases at retail should be equal.

A trade discount of "list less 40-20-10," assuming that the list price is $500,would result in the retailer paying $240.00 for the item.

The retailer needs to design the receiving and handling area to minimize theft as this is a high-theft area.

The effectiveness of the buyer-vendor relationship depends on the:

Service retailers can stockpile inventories in anticipation of future demand.

Dollar merchandise control over inventory purchases is frequently accomplished through a technique called open to buy.

Determine the buyer's BOM for March,using the percentage variation method,based on the following information: planned sales for March = $200,000; total spring sales = $600,000; spring months = 4; inventory turnover = 2.5.

Depth is the average number of SKUs within each brand of the merchandise line.

Vendor collusion often involves both a delivery person and a retailer employee with the two splitting the profit.

All of the following are methods of dollar merchandise planning EXCEPT:

The annual cost to retailers for carrying inventory is between 15 to 20 percent.

For most retailers,the limited amount of space in their store is a constraining factor on their optimal merchandise mix.

Which of the following is NOT a formal way of deciding inventory levels?

_____ is when the vendor allows the retailer extra time before payment is due for goods.

The shipping arrangement whereby the vendor pays all transportation costs is called FOB shipping point.

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