Editors Note:
After spending time in prayer to the Lord Jesus to help me study for the exam, I have prepared my own sample exam multiple choice questions in anticipation of the real exam. I wanted to share them with you all on this site to help you study if you think it would be helpful. If you do not know the answers, I would go over those pages from the textbook..

I do not know if the real exam will be easier than the one I prepared to help me study or if it will be harder. I did write 54 multiple choice questions and  based on the notes and textbook for the 4 chapters. These questions do not cover all the material in the notes or textbook but are a good way to study.

I would approach the multiple choice questions as fill in the blanks first. If you don’t know the answer, then look at the choices and try to figure out the answer. Have your notes and textbook ready! I do hope it helps you all to study!

Take this sample exam in test conditions and see how well you will do and where you need to brush up on! There are almost 33 pages of content that will help you be ready for the exam for chapters 9, 10, 12, & 13!  May the Lord bless you and guide you! Amen!

Most questions are from chapters 12 & 13. I hope you all receive it before the exam. Even if you receive it 15 min before the exam, you can go over the answer key to review for the exam.

1

Chap 12: 1, page 371

GMROI is

1. Gross Margin Return On Investment
2. Gross Margin Retail Of Inventory
3. Gross Margin Return On Inventory
4. Gross Margin Retail On Investment
5. None of the Above

2

Chapter 13: 1, page 403

Retailers use two types of buying systems known as

1. Staple merchandise buying system for basics
2. A merchandise budget for fashion merchandise
3. Staple merchandise buying system for fashion
4. Both A & B
5. All of the Above

3

Ch 10: 1, page 310

The integration of business processes from end user through original suppliers that provides products, services, and information that add value to customers is

Supply Chain Management

Demand Chain Management

Category Chain Management

Assortment Chain Management

None of the Above

4

Ch 9: 1, page 274

The strategic objective of human resource management is to

1. Align the capabilities and behaviors of employers with the short-term and long-term goals of the retail firm.
2. Align the capabilities and behaviors of customers with the short-term and long-term goals of the retail firm.
3. Align the capabilities and behaviors of employees with the short-term and long-term goals of the retail firm.
4. Align the capabilities and behaviors of management with the short-term and long-term goals of the retail firm.
5. None of the Above

5

Chapter 12: 24, page 374

All of the following are advantages of High Inventory Turnover except

1. Increased Cost of Goods Sold
2. Increased Sales Volume
3. Increased Money for Market Opportunities
4. Increased Salesperson morale
5. Increased Asset Turnover

6

Chapter 13: 3, page 403

Keeps track of the merchandise flows while they are occurring so buyers don’t spend too much or too little

1. Category system
2. Assortment Plan
3. Category Management
4. Merchandise Management
5. Open-to-Buy system

7

Ch 10: 3, page 314

Purchase data collected at the point of sale goes into a huge database known as

A. POS

B. PDA

C. Data Warehouse

D. EDI

E.  None of the Above

8

Ch 9: 2, page 274

Employee productivity is

1. The retailer’s sales or profit divided by the number of employees.
2. The retailer’s sales or profit multiplied by the number of employees.
3. The retailer’s sales or profit added by the number of employees.
4. The retailer’s sales or profit subtracted by the number of employees.
5. None of the Above

9

Chapter 12: 25, page 390

The number of different merchandising categories within a store or department is called

1. Assortment
2. Categories
3. Depth
4. Breadth
5. None of the Above

10

Chapter 13: 6, see your notes

Inventory used to guard retailer when vendor does not get merchandise to you on time

1. Cycle Stock
2. Base Stock
3. Buffer Stock
4. Value Stock
5. In House Stock

11

Ch 10: 5, page 311

The 80-20 rule states

A.    80% of loss comes from 20% of your customers

B.     80% of profit comes from 20% of your customers

C.     80% of profit comes from 20% of your vendors

D.    20% of profit comes from 80% of your customers

E.     Both B & D

12

Ch 9: 5, page 278

Identifies the activities to be performed by specific employees and determines the lines of authority and responsibility in the firm

1. Specialization
2. Centralization
3. Decentralization
4. Organization Structure
5. Organization Chart

13

Chapter 12: 26, page 391

The number of SKU’s within a category is called

1. Variety
2. Assortment
3. Breadth
4. Depth
5. B & D

14

Ch 13: 8, 408

Inventory whose sales fluctuate dramatically according to the time of year

1. Category merchandise
2. Seasonality merchandise
3. Fad merchandise
4. Staple merchandise
5. Deseasonalized merchandise

15

Ch 10: 7, page 315

The computer-to-computer exchange of business documents from retailer to vendor, and back. In addition to sales data, purchase orders, invoices, and data about returned merchandise are transmitted from retailer to vendor

A.    Electronic Data Interchange

B.     Electronic Data Exchange

C.     Exchange Date Interchange

D.    Data Electronic Interchange

E.     Data Warehouse Exchange

16

Ch 9: 8, see notes

When you delegate responsibility, you have to delegate ________ to go with it.

1. Tasks
2. Authority
3. Work
4. Specialization
5. Centralization

17

Chapter 12: 29, page 391

Product availability is the

1. Percentage of supply for a particular category that is satisfied.
2. Percentage of supply for a particular SKU that is satisfied.
3. Percentage of demand for a particular category that is satisfied.
4. Percentage of demand for a particular SKU that is satisfied.
5. None of the Above

18

Ch 13: 10, 408

The order point is the

1. Amount of inventory below which the quantity available shouldn’t go or the item will be out of stock before the next order arrives.
2. Amount of inventory below which the quantity available should reach or the item will be out of stock before the next order arrives.
3. Amount of inventory above which the quantity available shouldn’t go or the item will be out of stock before the next order arrives.
4. Amount of inventory above which the quantity available shouldn’t go or the item will be out of stock before the next order arrives.
5. None of the Above

19

Ch 10: 8, page 319

The part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption in order to meet customers’ requirements.

A.    Data Warehouse

B.     Logistics

C.     EDI

D.    ROI

E.     GMROI

20

Ch 9: 9, page 280

Focus employees on a limited set of activities which enables them to develop expertise and increase productivity is

1. Centralization
2. Decentralization
3. Specialization
4. Empowerment
5. None of the Above

21

Chapter 12: 33, page 397

An assortment plan describes in

1. Specific terms what should be carried in a particular SKU.
2. General terms what should be carried in a particular SKU.
3. Specific terms what should be carried in a particular merchandise category.
4. Specific terms what should be discontinued in a particular SKU
5. General terms what should be carried in a particular merchandise category.

22

Ch 13: 12, page 408

Amount of time between recognition that an order needs to be placed and when it arrives in the store and is ready for sale

1. Review Time
2. Order Point
3. Lead Point
4. Lead Time
5. Review Point

23

Ch 10: 10, page 321, see notes

Merchandise comes in from one side of the warehouse and loaded by trucks on other side to go to the store.

A.    Traditional Distribution Center

B.     Supply Distribution Center

C.     Crossdocking Distribution Center

D.    Logistics Distribution Center

E.     None of the Above

24

Ch 9: 13, see notes

The disadvantage of centralization is

Higher employee turnover

Cannot respond quickly to local market conditions

No Empowerment

Cannot react to sudden change

All of the Above

25

Chap 12: 2, page 370-371

The financial ratio that is useful for planning and measuring/evaluating merchandise performance is a return on investment measure called

1. ROI
2. GROI
3. GMROI
4. ROA
5. PME

26

Ch 13: 18, page 411

Shrinkage is

1. Inventory reduction that is caused by shoplifting by employees or customers
2. Merchandise being misplaced or damaged
3. Poor Bookkeeping
4. Difference between what you have and should have
5. All of the Above

27

Chapter 12: 39, page 363

The process by which a retailer attempts to offer the right quantity of the right merchandise in the right place at the right time while meeting the company’s financial goals is called

1. Supple Chain Management
2. Assortment Planning
3. Category Management
4. Merchandise Management
5. Category Planning

28

Ch 13: 20, page 415

Open to Buy system

Starts after merchandise is purchased using the merchandise budget plan or staple merchandise system.

Keeps track of merchandise flow while they’re occurring specifically they record how much is spent each month, and how much is left to spend.

Prevents merchandise from being delivered when it is not need.

Helps merchandise to be delivered when it is needed.

All of the Above

29

Chapter 12: 42, page 366

An assortment of items that the customer sees as reasonable substitutes for each other is called

1. Variety
2. Assortment
3. Category
4. Backup
5. Buffer

30

Ch 13: 26, page 420

This analysis utilizes the general 80-20 principle that implies that approximately 80 percent of a retailers sales or profits come from 20 percent of the products

Multi-Attribute Analysis

ABC Analysis

Sell-through Analysis

Gross Margin Analysis

GMROI Analysis

31

Chap 12: 45, page 370

The smallest unit for making inventory control decisions is called

1. SKU
2. Category
3. Assortment
4. Classification
5. Department

32

Ch 13: 28, page 423

In the Multiattribute method

Develop a list of issues to consider in evaluation

Importance weights for each issue should be determined by merchandise manager

Make Judgments about each brand’s performance on each issue

Mulitply the importance weight placed for each issue * the brand and add brands up

All of the above

33

Chap 12: 46, page 366

A Category captain is a supplier who forms an alliance with a retailer to

1. Help gain customer insight
2. Satisfy consumer needs
3. Improve the performance potential across the entire category
4. Improve the profit potential across the category
5. All of the Above

34

Ch 13: 14, page 408

Calculate the order point of Bibles with lead time being 40 days, Review time of 7 days, Demand is 40 per day, and backup stock is 40. Here the buyer orders if quantity available falls to

1. 1920 units
2. 1920 units or higher
3. Fewer than 1920 units
4. 1600 units or fewer
5. Both A & C

35

Chapter 12: 48, page 367

Potential problem with establishing a category captain, however is that

1. Vendors could take advantage of their position by choosing to maximize their own sales at the expense of its competition.
2. Anti-trust considerations
3. Collision with retailers to fix prices
4. Block other brands, particularly smaller brands, from access to shelf-space
5. All of the Above

36

Ch 13: 17, page 408

Calculate how many Bibles to order when the quantity available is less than the order point. The order point is 1800, Quantity at hand is 490, Quantity on order is 777.

1. We have to order 1277
2. We have to order 1267
3. We have to order 533
4. We have to order 1310
5. None of the Above

37

Chapter 12: 49, page 367

To avoid potential problems with the Justice Department, a category captain should

1. Divulge all information obtained from the retailer to the other brands in the category
2. Appoint another large brand as a “category adviser” to oversee the captain’s decisions
3. Not serve as captain for two retailers in the same market to circumvent potential collusion in price setting
4. None of the Above
5. All of the Above

38

Ch 13: 24, page 417

The Actual BOM stock for Bibles is 59,500, the monthly additions actual is 7,000, what is on order is 18,000 , Sales is 15,600, monthly reductions plan is 2, 310, the planned EOM stock is 68,640, so the projected EOM stock plan is

41, 500

52, 500

66, 590

57, 190

None of the above

39

Chap 12:  9, Check your notes for formula

Calculate the GMROI for a Christian Bookstore that has annual sales of $20,000 for T-Shirts, Gross Margin of 45%, and Average Inventory (at cost) of $75,000.

1. 14.67 %
2. 8%
3. 12%
4. 10%
5. None of the Above

40

Ch 13: 25 page 417

The Open-to-buy plan for Bibles is

41,500

57,190

2,050

2,310

None of the above

41

Chap 12:  16, page 373 + Check your notes for formula

Calculate the Inventory Turnover for a Christian Bookstore that has annual sales of $20,000 for T-Shirts, Gross Margin of 45%, and Average Inventory (at cost) of $75,000.

1. .1467
2. .0800
3. .1200
4. .1000
5. None of the Above

42

Ch 13: 19, page 411

Schenley Cafeteria should have 4 boxes of cereal which contain 96 cereals in each. When a physical inventory is done after being put out on the sales floor but none of been sold, now there are only 3 boxes left. The shrinkage that occurred is

1. 384
2. 192
3. 288
4. 96
5. 278

43

Chapter 12: 31, page 391

You go into Christian Family store to buy a Bible making you the 100^th customer in there. Unfortunately, after the 90^th Bible, they run out of Bibles. Christian Family store has a level of support of

1. 100% because of their caring customer service
2. 10% because of their shortage of Bibles
3. 90% because of being able to have a supply of 90
4. 0% for running out of Bibles
5. None of the Above

44

Ch 13: 15, page 406

Quantity available is

1. Quantity on hand – Quantity on order
2. Quantity on hand + Quantity on order
3. Quantity on order – Quantity on hand
4. Quantity on hand * Quantity on order
5. Quantity on hand / Quantity on order

45

Chap 12: 19, Check your notes

A fictional store called Christian Family has a Gross Margin of 45% , Cost of Goods sold at 11,000, calculate the net sales

1. 9,000
2. 22,000
3. 20,000
4. 12,000
5. 15,000

46

Chapter 12: 23, page 374

If you have Inventory Turnover on Christian CD’s to be 7 times in 6 months, the IT expressed on an annual basis is

1. 13
2. 1.1
3. 42
4. 12
5. 14

47

Ch 13: 21. page 417

For a month that is over,

The Actual EOM stock = Projected BOM stock

The Actual EOM stock = Planned EOM stock

The Actual EOM stock = Projected EOM stock

The Actual EOM stock = Planned BOM stock

The Actual EOM stock = 0

48

Chap 12: 6, page 371

Average Inventory in GMROI is measured at

1. Cost because a retailer’s investment in inventory is the cost of the inventory.
2. Cost because a retailer’s investment in inventory is the retail of the inventory.
3. Retail because a retailer’s investment in inventory is the retail of the inventory.
4. Retail because a retailer’s investment in inventory is the cost of the inventory.
5. None of the above

49

Ch 13: 22, page 417

This is equal to the inventory we have at the beginning of the month plus what we buy minus what we get rid of through sales or other inventory reductions

Planned EOM stock

Actual EOM stock

Projected EOM stock

Actual BOM stock

Planned BOM stock

50

Chap 12: 3, page 371

GMROI is a financial ratio that

1. Measures how many gross margin dollars are spent on every dollar of inventory investment.
2. Measures how many gross margin dollars are earned on every dollar of inventory investment.
3. Measures how many gross margin dollars are earned on every 100 dollars of inventory investment at retail
4. Measures how many gross margin dollars are earned on every 100 dollars of inventory investment at cost
5. None of the Above

51

Chapter 13: 2, page 403

All of the following are characteristics of staple merchandise buying system

1. Forecasting Demand is much more straightforward
2. There is an established sales history for each SKU
3. Standard statistical techniques are used to forecast sales
4. None of the Above
5. All of the Above

52

Chap 12: 8, page 372

GMROI that is

1. Higher is better for business
2. Lower is better for business
3. Higher is worse for business
4. Lower is worse for business
5. Both A & D

53

Chapter 12: 20, page 372

Bibles are delivered to a fictional store called Family Christian. The faster this process takes place, the

1. Lower the Inventory Turnover
2. Lower the Inventory Backup
3. Higher the Inventory Turnover
4. Higher the Inventory Backup
5. None of the Above

54

Chapter 13: 4, page 404

Used for merchandise that follows a predictable order-receipt-order cycle where most merchandise fits this criterion. Utilized for buying most of the merchandise in food and discount stores

1. Fashion merchandise buying system
2. Assortment Plan Buying System
3. Category Management Buying System
4. Staple merchandise buying system
5. Supply Management Buying System

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