1.The retail price of a sweater is $75 and the initial markup is 51 percent. Calculate the cost of the






2.A vendor’s recent shipment at the retailer’s distribution center was on time, but the boxes were

mislabeled along with other infractions against the retailer’s mandated shipment policies. What should the

retailer do?

A.Pay the vendor invoice immediately to assure deliveries are still on time in the future.

B.Accept vendors’ gifts to repay the inconvenience infractions.

C.Issue a chargeback.

D.Take the vendor to court.

3.Cliff struggled with the price of produce at his well-established produce markets. The reputation of the

markets has attracted repeat customers from a 50-mile radius. Recently, local farmers have been increasing

produce prices for him due to the upsurge in gas prices. Now Cliff feels it is time to pass the costs onto his

customers. What should Cliff predict in regards to how his customers will respond?

A.Sales may decrease.

B.Nothing will keep sales down and business will continue as usual.

C.Increasing prices will increase sales because the produce will be perceived as better quality.

D.The customers will think the produce quality is worth the price.

4.Which of the following statements describes situations in which markdowns wouldnotbe appropriate?

A.Markdowns would be appropriate for a group of t-shirts that have a higher turnover than other t-shirts in the department.

B.Markdowns would be appropriate for national brand merchandise that was priced 15 percent lower in a neighboring

competing store.

C.Markdowns would be appropriate for licensed merchandise supporting a movie that was not as popular as predicted.

D.Markdowns would be appropriate on a pair of pillows that had been part of a display and were showing light wear.

5.Andrea wants to build top of the mind awareness for her nail shop. Thebestway for her to develop this

awareness would be to

A.offer better customer service and good publicity will naturally spread.

B.repeatedly expose customers to the name of the shop through advertising.

C.partner with her vendors to bring great merchandise into the store.

D.teach nail design classes.

6.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?





7.When given a choice between a national brand of costume jewelry, and a private-label brand, the buyer

for a chain of mall specialty stores might choose the private-label brand to

A.increase its merchandising flexibility.

B.limit its store traffic to qualified buyers.

C.increase its nonaffluent customers.

D.prevent its customers from comparison shopping.

8.How does optimization software help retailers to price merchandise?

A.It continually updates buyers on sales by price beginning at the point of sale.

B.It gives retailers the point at which it is optimal to job-out and consolidate.

C.It updates pricing based on actual sales and factors in differences in price sensitivities.

D.It dictates markdown merchandise into one percentage markdown per week in the store.

9.Cindy owns a popular women’s boutique in a gentrified urban area. She carries women’s career wear

and an extensive selection of quality leather handbags. Recently, Cindy noticed that her shoppers have a

high awareness of her apparel, but are surprised when they see the handbags. Since the handbags have high

margins, she is concerned about the shoppers’ surprised response. Cindy should

A.do nothing since the handbags are already selling.

B.place the handbags in the back of the store.

C.allocate more of the communication budget to advertise the handbags in special ads.

D.realize the passing fad of leather and provide less of an assortment.

10.When Whitney took over her father’s sporting goods store, she evaluated some of her father’s vendor

relationships. She found that Rodney’s Exercise Wear wasn’t particularly profitable for the store. Although

committed, his products were expensive and he seemed inflexible. Whitney tried to work out a more

amicable relationship with him by discussing her sales goals and new ideas for the coming year, but Rodney

seemed uninterested. Which of the following ismostlikely lacking from the development of this


A.Fulfilled obligations

B.Open communication

C.Poor leadership

D.Long-term gains

11.The merchandise that Vivian buys tends to need continuous replenishment. What type of merchandise

does she buy?

A.Seasonal merchandise

B.Sample merchandise

C.Staple merchandise

D.Expected merchandise

12.Which of the following analyses compares actual to planned sales so buyers know to buy more

merchandise or markdown existing merchandise?


B.Sell-through analysis

C.ABC analysis

D.Inventory turnover analysis

13.How can the use of an EDLP strategy increase a retailer’s profit margin?

A.EDLP increases the large variations in demand caused by frequent sales.

B.The stable prices caused by EDLP require the use of more weekly advertising.

C.Employees provide less customer service because of the sale-stimulated throngs of people.

D.EDLP reduces the retailer operating expenses because employees don’t have to spend time continually making price changes.

14.How can a retailer that wants to use an EDLP strategy persuade customers away from high/low

strategy competitors?

A.By using a demand-oriented method for setting retail prices.

B.By refusing to accept manufacturers’ coupons.

C.By slowly reducing the number of sales “events”.

D.By using price lining.

15.Competing retailers agreeing to sell products at set prices so as not to compete is using

A.vertical price fixing.

B.predatory pricing.

C.horizontal price fixing.

D.MSRP pricing.

16.Which of the following doesnotdescribe an approach for buying national brand merchandise?

A.Buyers attend trade shows to see the latest products and styles.

B.Buyers using reverse auctions.

C.Buyers discuss the performance of the vendor’s merchandise during the previous season during market weeks.

D.Buyers meet national brand vendors in wholesale market centers.

17.Companies are practicing _______ market products to be environmentally friendly for the purpose of

gaining public approval and higher sales rather than to actually improve the environment.

A.fair trade

End of exam

B.black marketing


D.green sheen

18.How do buying staple merchandise categories differ from buying fashion merchandise categories?

A.Standard statistical techniques are used when buying fashion merchandise categories.

B.The staples buying system requires more experienced buyers.

C.Buyers forecast sales at the category level for staple merchandise.

D.Monitoring sales and generating replacement orders with continuous replenishment is used for staple merchandise.

19.Which of the following issues wouldnotbe appropriate for buyers to discuss with a vendor that has

been performing well above their planned gross margin?

A.Markdown money provisions

B.Margin enhancing opportunities

C.Advertising allowances

D.Terms of purchase

20.Which of the following statements about category management isfalse?

A.A category manager is also called a category captain, and they work with vendors to get the most profit from collaborative


B.A category manager ensures that the store’s assortment includes the “best” combination of sizes and vendors.

C.Managing merchandise within a category by brand can lead to inefficiencies because it fails to consider the interdependencies

between SKUs in the category.

D.The category management approach to managing breakfast cereals in supermarkets should have one buyer or category

manager who oversees all merchandising activities for the entire category.