Exam 16: Managing Retailing, Wholesaling, and Logistics

E&OE is looking to reduce its inventory costs for all its products. The company realizes that its inventory depends on the setup costs of its various products. How do setup costs affect E&OE's inventory costs?

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Question 1

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As inventory draws down, management must know at what stock level to place a new order. The company needs to balance order-processing costs and inventory-carrying costs. Order-processing costs for E&OE consist of setup costs and running costs (operating costs when production is running) for the item. If setup costs are low, E&OE can produce the item often, and the average cost per item is stable and equal to the running costs. If setup costs are high, E&OE can reduce the average cost per unit by producing a long run and carrying more inventory. The larger the average stock carried, the higher the inventory-carrying costs.

___________ often help retailers improve their operations by training sales clerks, helping with store layouts and displays, and setting up accounting and inventory-control systems.

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Question 2

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Discount stores that try to keep prices as low as possible are more likely to function using ________ operations.

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Question 3

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Skincare company E&OE has realized that its customers are very loyal to the brand and play a large part in popularizing it by word of mouth. E&OE wants to leverage this customer loyalty by using it to generate sales outside its store format. How can E&OE achieve this?

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Question 4

List and explain the four service levels offered by retailers.

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Question 5

Companies are reducing their inventory costs by treating inventory items differently, positioning them according to risk and opportunity. High-risk, low-opportunity items are known as ________.

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Question 6

A ________ is a retail firm owned by its customers. Members contribute money to open their own store, vote on its policies, elect a group to manage it, and receive dividends.

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Question 7

________ refers to buying large carload lots and dividing them into smaller units before shipping them out to consumers.

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Question 8

Reynold's, a supermarket chain, carries the K-Nine range of dog food manufactured by JGB. However, the chain does not interact directly with JGB, but obtains stocks from wholesalers. It has been suggested that Reynold's save costs by sourcing products directly from JGB. However, Mal, the CEO of the Reynold's, insists that wholesalers are the most hassle-free option for Reynold's. What can Mal say to justify this?

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Question 9

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EDLP can lead to lower advertising costs and higher retail profits.

(True/False)

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Question 10

A stock order point of 10 means ordering the product ________.

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Question 11

Which of the following is an ancillary service offered by retailers?

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Question 12

________ are unbranded, plainly packaged, less expensive versions of common products such as soy sauce, paper towels, and canned fruits.

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Question 13

Inventory cost increases at an accelerating rate as the customer-service level approaches 100 percent.

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Question 14

Jane runs a small grocery store. As there are only few customers, the store does not require to stock goods in large quantities. Explain why sourcing products from a wholesaler will be beneficial for Jane.

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Question 15

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Sandy's Stores is a small chain of grocery stores located in a few neighboring towns. The stores have always been largely self-service, but the company is considering making a switch to full-service stores. Offer one possible reason why this move is justified.

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Question 16

In supermarkets and other retail outlets, RFID is used to ________.

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Question 17

In your neighborhood there is a small men's store that has a limited selection of clothing, but the selection that is carried is of very high quality and price. Services include free alterations and tailoring, personalized record keeping, and free dry cleaning. The inside of the store has deep leather chairs and couches and thick pile carpet. Upon entering the store, a customer feels "special and rich." In terms of differentiation, what is this retailer trying to communicate by its decorations and service level?

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Question 18

Modern retailers use technology to produce better forecasts, control inventory costs, and order electronically from suppliers. Technology is also affecting what happens inside the store.

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Question 19

In ________ retailing, salespeople are ready to assist in every phase of the "locate-compare-select" process.

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Question 20

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E&OE is looking to reduce its inventory costs for all its products. The company realizes that its inventory depends on the setup costs of its various products. How do setup costs affect E&OE's inventory costs?

___________ often help retailers improve their operations by training sales clerks, helping with store layouts and displays, and setting up accounting and inventory-control systems.

Discount stores that try to keep prices as low as possible are more likely to function using ________ operations.

Skincare company E&OE has realized that its customers are very loyal to the brand and play a large part in popularizing it by word of mouth. E&OE wants to leverage this customer loyalty by using it to generate sales outside its store format. How can E&OE achieve this?

List and explain the four service levels offered by retailers.

Companies are reducing their inventory costs by treating inventory items differently, positioning them according to risk and opportunity. High-risk, low-opportunity items are known as ________.

A ________ is a retail firm owned by its customers. Members contribute money to open their own store, vote on its policies, elect a group to manage it, and receive dividends.

________ refers to buying large carload lots and dividing them into smaller units before shipping them out to consumers.

EDLP can lead to lower advertising costs and higher retail profits.

A stock order point of 10 means ordering the product ________.

Which of the following is an ancillary service offered by retailers?

________ are unbranded, plainly packaged, less expensive versions of common products such as soy sauce, paper towels, and canned fruits.

Inventory cost increases at an accelerating rate as the customer-service level approaches 100 percent.

Jane runs a small grocery store. As there are only few customers, the store does not require to stock goods in large quantities. Explain why sourcing products from a wholesaler will be beneficial for Jane.

Sandy's Stores is a small chain of grocery stores located in a few neighboring towns. The stores have always been largely self-service, but the company is considering making a switch to full-service stores. Offer one possible reason why this move is justified.

In supermarkets and other retail outlets, RFID is used to ________.

Modern retailers use technology to produce better forecasts, control inventory costs, and order electronically from suppliers. Technology is also affecting what happens inside the store.

In ________ retailing, salespeople are ready to assist in every phase of the "locate-compare-select" process.

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