TestBank Chapter 16 GSCM

Supply Chain Management, 6e, Global Edition (Chopra/Meindl)
Chapter 16 Pricing and Revenue Management in a Supply Chain

16.1 True/False Questions

1) Revenue management is the use of marketing to increase the profit generated from a limited
supply of supply chain assets.
Answer: FALSE
Diff: 2
Topic: 16.1 The Role of Pricing and Revenue Management in a Supply Chain
AACSB: Application of knowledge
Objective: LO 16.1: Understand the role of revenue management in a supply chain.

2) Pricing may influence demand if customers are price sensitive.
Answer: TRUE
Diff: 2
Topic: 16.1 The Role of Pricing and Revenue Management in a Supply Chain
AACSB: Application of knowledge
Objective: LO 16.1: Understand the role of revenue management in a supply chain.

3) Revenue management may also be defined as the use of differential pricing based on customer
segment, time of use, and product or capacity availability to increase supply chain surplus.
Answer: TRUE
Diff: 2
Topic: 16.1 The Role of Pricing and Revenue Management in a Supply Chain
AACSB: Application of knowledge
Objective: LO 16.1: Understand the role of revenue management in a supply chain.

4) Revenue management adjusts the pricing and available supply of assets to maximize profits.
Answer: TRUE
Diff: 1
Topic: 16.1 The Role of Pricing and Revenue Management in a Supply Chain
AACSB: Application of knowledge
Objective: LO 16.1: Understand the role of revenue management in a supply chain.

5) In theory, the concept of differential pricing decreases total cost for a firm.
Answer: FALSE
Diff: 2
Topic: 16.1 The Role of Pricing and Revenue Management in a Supply Chain
AACSB: Application of knowledge
Objective: LO 16.1: Understand the role of revenue management in a supply chain.




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,6) To differentiate between the various market segments, the firm must either eliminate barriers
that identify product or service attributes the segments value differently.
Answer: FALSE
Diff: 1
Topic: 16.2 Pricing and Revenue Management for Multiple Customer Segments
AACSB: Analytical thinking
Objective: LO 16.2: Identify conditions under which revenue management tactics can be
effective.

7) In most instances of differential pricing, demand from the segment paying the lower price
arises earlier in time than demand from the segment paying the higher price.
Answer: TRUE
Diff: 2
Topic: 16.2 Pricing and Revenue Management for Multiple Customer Segments
AACSB: Analytical thinking
Objective: LO 16.2: Identify conditions under which revenue management tactics can be
effective.

8) Spoilage occurs when the capacity reserved for higher price buyers is wasted because demand
from the higher price segment does not materialize.
Answer: TRUE
Diff: 1
Topic: 16.2 Pricing and Revenue Management for Multiple Customer Segments
AACSB: Analytical thinking
Objective: LO 16.3: Describe trade-offs that must be considered when making revenue
management decisions.

9) Wastage occurs if higher price buyers have to be turned away because the capacity has already
been committed to lower price buyers.
Answer: FALSE
Diff: 2
Topic: 16.2 Pricing and Revenue Management for Multiple Customer Segments
AACSB: Analytical thinking
Objective: LO 16.3: Describe trade-offs that must be considered when making revenue
management decisions.

10) An order from a lower price buyer should be accepted if the expected revenue from a higher
price buyer is lower than the current revenue from the lower price buyer.
Answer: TRUE
Diff: 1
Topic: 16.3 Pricing and Revenue Management for Perishable Assets
AACSB: Analytical thinking
Objective: LO 16.3: Describe trade-offs that must be considered when making revenue
management decisions.




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, 11) Unused capacity from the past is extremely valuable.
Answer: FALSE
Diff: 1
Topic: 16.3 Pricing and Revenue Management for Perishable Assets
AACSB: Analytical thinking
Objective: LO 16.1: Understand the role of revenue management in a supply chain.

12) The tactic of varying price over time is suitable for assets such as fashion apparel that have a
clear date beyond which they lose a lot of their value.
Answer: TRUE
Diff: 1
Topic: 16.3 Pricing and Revenue Management for Perishable Assets
AACSB: Analytical thinking
Objective: LO 16.1: Understand the role of revenue management in a supply chain.

13) Effective differential pricing over time will generally increase the level of product
availability for the consumer willing to pay full price, but will decrease total profits for the
retailer.
Answer: FALSE
Diff: 2
Topic: 16.3 Pricing and Revenue Management for Perishable Assets
AACSB: Analytical thinking
Objective: LO 16.3: Describe trade-offs that must be considered when making revenue
management decisions.

14) The tactic of overbooking or overselling the available asset is suitable in any situation where
customers are able to cancel orders and the value of the asset drops significantly after a deadline.
Answer: TRUE
Diff: 1
Topic: 16.3 Pricing and Revenue Management for Perishable Assets
AACSB: Analytical thinking
Objective: LO 16.3: Describe trade-offs that must be considered when making revenue
management decisions.

15) The basic trade-off to consider during overbooking is between having wasted capacity (or
inventory) because of few cancellations or having a shortage of capacity (or inventory) because
of excessive cancellations.
Answer: FALSE
Diff: 2
Topic: 16.3 Pricing and Revenue Management for Perishable Assets
AACSB: Analytical thinking
Objective: LO 16.3: Describe trade-offs that must be considered when making revenue
management decisions.




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