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CHAPTER 9MERCHANDISE BUYING AND HANDLING MULTIPLE CHOICE 1. The analysis, planning, acquisition, handling, and control of the merchandise investments of a retail operation is termed: a. inventory planning. b. sales review/planning. c. product ordering. d. merchandise management. e. merchandise acquisition. ANS: D PTS: 1 REF: p. 312 OBJ: LO 9-1 2. Gross margin return on inventory (GMROI) equals: a. gross margin percentage / dollars invested in inventory at retail. b. (gross margin / net sales) (net sales / aver- age inventory at cost). c. gross margin percentage / inventory turnover rate. d. net profit margin / markdown percentage. e. (gross margin / net sales) (net sales / aver- age inventory at retail). ANS: B PTS: 1 REF: p. 315 OBJ: LO 9-2 3. If a merchandise line has a gross margin of 35 percent and sales per dollar of inventory investment of 4.0, what is its GMROI? a. $ 2.60 b. $ 1.40 c. $ 6.15 d. $11.43 e. $14.00 ANS: B PTS: 1 REF: p. 315 OBJ: LO 9-2 4. All of the following are methods of dollar merchandise planning EXCEPT: a. stock-to-sales ratio. b. percentage variation. c. basic stock. d. weeks supply. e. valuation turns. ANS: E PTS: 1 REF: p. 316 OBJ: LO 9-2 5. Which of the following is NOT a formal way of deciding inventory levels? a. Stock-to-sales ratio b. Gross margin contribution c. Basic stock d. Weeks supply e. Percentage variation ANS: B PTS: 1 REF: p. 316 OBJ: LO 9-2 6. The _____ method of merchandise planning requires that, in addition to a base stock level, there will be a variable amount of inventory that will increase or decrease at the beginning of each sales period. a. base level b. base BOM contribution c. basic stock d. stock-to-sales e. average stock ANS: C PTS: 1 REF: p. 317 OBJ: LO 9-2 7. When retailers believe that it is necessary to have a given level of inventory available at all times, they will likely use the _____ method for inventory management. a. basic trade b. basic stock c. weeks supply d. consumer demand e. stock-to-sales ANS: B PTS: 1 REF: p. 317 OBJ: LO 9-2 8. The _____ is NOT considered when calculating BOM stock using the basic stock method. a. number of months in the season b. total planned sales for the season c. number of weeks in the retailers merchand- ising season d. estimated turnover rate for the season e. basic stock level needed ANS: C PTS: 1 REF: p. 318 OBJ: LO 9-2 9. Determine the buyers BOM for October, using the basic stock method, based on the following in- formation: planned sales for October = $150,000; average monthly sales = $175,000; average stock for the season = $500,000. a. $150,000 b. $325,000 c. $475,000 d. $825,000 e. $955,000 ANS: C PTS: 1 REF: p. 318 OBJ: LO 9-2 10. Determine the BOM for March, using the basic stock method, based on the following information: planned sales for March = $175,000; total spring sales = $600,000; spring months = 4; inventory turnover = 2.... View Full Document

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