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

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

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

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


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. GMROIB. 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

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

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

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

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