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Exam 18: Managing Retailing, Wholesaling, and Logistics

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Question 51

Multiple Choice

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E&OE is trying to minimize its inventory costs, which are extremely high. The company has realized that it can achieve this by maintaining a near-zero inventory and producing more products only once it is ordered. Which of the following is true for E&OE?

A) Inventory costs are lower than order-processing costs.
B) Running costs are higher than inventory-carrying costs.
C) Setup costs for the products are low.
D) Order-processing costs are high.
E) Order-processing costs are lower than setup costs.

F) D) and E)
G) B) and D)

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Question 52

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Telemarketing is a type of ________.

A) direct selling
B) network marketing
C) multilevel selling
D) close-range marketing
E) direct marketing

F) All of the above
G) C) and D)

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Question 53

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What is the role of information technology in the logistics system?

The owner of supermarket chain Reynold's has realized that customers want a wider variety of goods than is currently available. However, Reynold's cannot afford the costs of storing excess inventory. Additionally, the owner is not willing to take the risk that the new products will remain unsold. Which of the following types of wholesalers can help Reynold's meet customer demand while minimizing costs?

The order-processing cost per unit increases with the number of units ordered because the order costs are spread over more units.

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 recordkeeping, and free dry cleaning. Inside the store are 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?

Low prices on some items serve as traffic builders or loss leaders for retailers.

The franchisor owns a trade or service mark and licenses it to franchisees in return for royalty payments.

Supercenters retail grocery items as well as a huge selection of nonfood merchandise.

Merchant wholesalers are independently owned businesses that take title to the merchandise they handle.

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 Reynold's, insists that wholesalers are the most hassle-free option for Reynold's. What can Mal say to justify this?

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?

Consumers now receive sales offers through direct-mail letters and catalogs, television, cell phones, and the Internet. The nonstore-based retailers are taking business away from store-based retailers.

Which of the following is true for retailing?

Mal's father and grandfather ran Reynold's, a general store in the town of Bayswater. When Mal inherited the store, the town was expanding rapidly and a number of multinational franchisors showed interest in entering the town. Mal wants to turn Reynold's into a franchise of Blue Sun, a fast-food chain. What benefits can Mal gain from this move?

"Pop-up" stores let retailers promote brands to seasonal shoppers for a limited time.

Which of the following is an example of retailing?

Which of the following is true for self-service retailing?

________ sell and deliver a limited line of semiperishable goods to supermarkets, grocery stores, hospitals, restaurants, and hotels.

Which of the following is true for franchisees?