Retail Management Exam 3 Questions
and Answers24
Feature Fixture - ANSWERS -A display that draws special attention to selected features (e.g.,
color, shape, or style) of merchandise.
Face out
Ambience - ANSWERS -The overall feeling or mood projected by a store through its aesthetic
appeal to human senses.
Merchandise Management - ANSWERS -The analysis, planning, acquisition, handling, and
control of the merchandise investments in a retail operation.
Can be performed by a retail worker, salesperson, etc.
Most entry-level marketing positions involve some form of contact with _____________
Planogram - ANSWERS -A schematic that illustrates how and where a retailer's merchandise
should be displayed on the shelf in order to increase customer purchases.
Often maintained with the input of vendors
Gross Margin Return on Inventory (GMROI) - ANSWERS -Incorporates into a single measure the
idea of both inventory turnover and profit, and is used because inventory is the largest
investment a retailer makes.
,(Gross Margin/Net Sales) x (Net Sales/Average Inventory at Cost) = (Gross Margin/Average
Inventory at Cost)
Gross Margin/Inventory Investment
In most lines of retailing GMROI performance of over 200 percent is expected.
Basic Stock Method (BSM) - ANSWERS -A technique for planning dollar inventory investments
and allows for a base stock level plus a variable amount of inventory that will increase of
decrease at the beginning of each sales period in the same dollar amount as the period's
expected sales.
Used when retailers believe that it is necessary to have a stable level of inventory available at all
times.
Works best when a retailer has a low turnover rate or sales are erratic.
Average Stock for the Season = Total Planned Sales for the Season/Estimated Inventory Turnover
Rate for the Season
Average Monthly Sales = Total Planned Sales for the
Season/Number of Months in the Season
Basic Stock = Average Stock for the Season - Average Monthly Sales for the Season
BOM Stock = Planned Monthly Sales + Basic Stock
Percentage Variation Method (PVM) - ANSWERS -A technique for planning dollar inventory
investments that assumes that the percentage fluctuations in monthly stock from average stock
should be half as great as the percentage fluctuations in monthly sales from average sales.
Used when the retailer has a high annual inventory-turnover rate - six or more times a year.
, BOM Stock = Avg. Stock for the Season x
½[1+(Planned Sales for the Month/Average Monthly Sales)]
Week's Supply Method (WSM) - ANSWERS -A technique for planning dollar inventory
investments that states that the inventory level should be set equal to a predetermined number
of week's supply, which is directly related to the desired rate of stock turnover.
Used by retailers such as grocers, whose inventories are planned on a weekly, not monthly,
basis, and where sales do not fluctuate substantially.
Inventory level in dollars varies proportionally with forecast sales.Thus, if forecast sales triple,
the inventory in dollars will also triple.
Stock-to-Sales Method (SSM) - ANSWERS -A technique for planning dollar inventory investments
where the amount of inventory planned for the beginning of the month is a ratio (obtained
from trade associations or the retailer's historical records) of stock-to-sales.
This is the method used in our merchandise budget and is quite easy; however, it requires the
retailer to have a BOM stock-to-sales ratio, which can be gained from:
1. POS data 2. Trade Associations 3. Turnover goals
Divide the number of months in the season by the desired inventory-turnover rate.
Open-to-Buy (OTB) - ANSWERS -Represents the dollar amount a buyer can currently spend on
merchandise without exceeding the planned dollar stock.
Calculated as follows:
and Answers24
Feature Fixture - ANSWERS -A display that draws special attention to selected features (e.g.,
color, shape, or style) of merchandise.
Face out
Ambience - ANSWERS -The overall feeling or mood projected by a store through its aesthetic
appeal to human senses.
Merchandise Management - ANSWERS -The analysis, planning, acquisition, handling, and
control of the merchandise investments in a retail operation.
Can be performed by a retail worker, salesperson, etc.
Most entry-level marketing positions involve some form of contact with _____________
Planogram - ANSWERS -A schematic that illustrates how and where a retailer's merchandise
should be displayed on the shelf in order to increase customer purchases.
Often maintained with the input of vendors
Gross Margin Return on Inventory (GMROI) - ANSWERS -Incorporates into a single measure the
idea of both inventory turnover and profit, and is used because inventory is the largest
investment a retailer makes.
,(Gross Margin/Net Sales) x (Net Sales/Average Inventory at Cost) = (Gross Margin/Average
Inventory at Cost)
Gross Margin/Inventory Investment
In most lines of retailing GMROI performance of over 200 percent is expected.
Basic Stock Method (BSM) - ANSWERS -A technique for planning dollar inventory investments
and allows for a base stock level plus a variable amount of inventory that will increase of
decrease at the beginning of each sales period in the same dollar amount as the period's
expected sales.
Used when retailers believe that it is necessary to have a stable level of inventory available at all
times.
Works best when a retailer has a low turnover rate or sales are erratic.
Average Stock for the Season = Total Planned Sales for the Season/Estimated Inventory Turnover
Rate for the Season
Average Monthly Sales = Total Planned Sales for the
Season/Number of Months in the Season
Basic Stock = Average Stock for the Season - Average Monthly Sales for the Season
BOM Stock = Planned Monthly Sales + Basic Stock
Percentage Variation Method (PVM) - ANSWERS -A technique for planning dollar inventory
investments that assumes that the percentage fluctuations in monthly stock from average stock
should be half as great as the percentage fluctuations in monthly sales from average sales.
Used when the retailer has a high annual inventory-turnover rate - six or more times a year.
, BOM Stock = Avg. Stock for the Season x
½[1+(Planned Sales for the Month/Average Monthly Sales)]
Week's Supply Method (WSM) - ANSWERS -A technique for planning dollar inventory
investments that states that the inventory level should be set equal to a predetermined number
of week's supply, which is directly related to the desired rate of stock turnover.
Used by retailers such as grocers, whose inventories are planned on a weekly, not monthly,
basis, and where sales do not fluctuate substantially.
Inventory level in dollars varies proportionally with forecast sales.Thus, if forecast sales triple,
the inventory in dollars will also triple.
Stock-to-Sales Method (SSM) - ANSWERS -A technique for planning dollar inventory investments
where the amount of inventory planned for the beginning of the month is a ratio (obtained
from trade associations or the retailer's historical records) of stock-to-sales.
This is the method used in our merchandise budget and is quite easy; however, it requires the
retailer to have a BOM stock-to-sales ratio, which can be gained from:
1. POS data 2. Trade Associations 3. Turnover goals
Divide the number of months in the season by the desired inventory-turnover rate.
Open-to-Buy (OTB) - ANSWERS -Represents the dollar amount a buyer can currently spend on
merchandise without exceeding the planned dollar stock.
Calculated as follows:
