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Retail Management Tutorial-6.docx-1
Retail Management Tutorial-6.docx-1
1. What must happen after a buyer agrees to purchase a product before a purchase
order can be created?
Answer:
• By selling products to buyer, seller need to confirms that the following term & conditions
are apply to buyer’s purchase before the purchase order created, which includes the term
services, where applicable. Create contract purchase agreements with buyer to agree on
specific terms and conditions with indicating the goods and services that the buyer will be
purchasing. Buyer can later issue standard purchase orders referencing the contracts, and
can encumber these purchase orders if the buyer use encumbrance accounting.
• Regardless of who the retailer purchases from, the buyer must negotiate a vendor
contract, the buyer negotiates and purchases merchandise. So, the buyer must consider
how the merchandise will be priced, promoted, shipped, and so on.
• Adding items to the retailer’s computer system that allow the merchandise to be tracked
and purchase orders created. If buyers forgets to do so or links it incorrectly, customer
service and sales problem are bound to occur, and the buyers is likely to be reprimanded
or fired.
2. If your annual inventory- turnover rate is four times, which inventory stock level
method would you use and why?
Answer:
• Basic stock method
Comparison between basic stock method and week’s supply method
4. What are the major constraints in designing the optimal merchandise mix?
Answer:
• Dollar-merchandise constraints
-retailers try to overcome the dollar constraint by:
(Shifting the expense of carrying inventory back on the vendor.)
• Consignment (pay from scan)
-vendor retains the ownership of the goods.
-vendor establishes the selling price which is paid when the goods are sold.
-helps reduce risk for seasonal products.
• Extra dating
-allows the retailer extra or interest free days before the period of payment begins.
• Space constraints
-it is important to have enough empty space to separate the distinct merchandise
lines.
-Operation guides- tell how much space should be between each fixture, rack,
display, and so forth
• Merchandise-turnover constraints
-retailer must know how various merchandise mixes will affect inventory turnover.
• Market constraints
-affect decision on variety, breadth, and depth.
-have a profound effect on how the consumer perceives the store.
5. How can merchandise lines have too much breadth yet not enough depth?
Answer:
Merchandise Line- Group of products that are closely related because
they
Are intended for the same end use
Are sold to the same customer group
Fall within given price range
Breadth
- Number of merchandise brands that are found in a merchandise line; is particularly a
problem for retailers selling private-label brands.
-Battle of the brands: Retailers have their own product competing with the
manufacturer’s products for shelf space and control over display location
Depth
- Average number of stock- keeping units within each brand of the merchandise line.
Exp. SenQ, Harvey Norman
7. What do you think is the most important criterion in selecting a vendor? Why?
Answer:
Following criteria should be considered by the retailer in choosing a vendor:-
• Selling history and consumers’ perception of the manufacturer’s or wholesaler’s
reputation
• Reliability of delivery, trade terms, and projected markup
• Quality of merchandise and after-sales service
• Transportation time and distribution-center processing time
• Inventory carrying cost and net cost
• Country of origin and fashionability
8. Why should a new buyer look over the previous buyer’s confidential vendor
analysis before going to market?
Answer:
• Confidential Vendor Analysis
- Identical to the vendor profitability analysis but also provides a three- year financial
summary as well as the names, titles, and negotiating points of all the vendor’s sales
staff.
• A new buyer should look over the previous buyer’s confidential vendor analysis
before going to the market this is because the vendor can clearly analysis the market
through out the previous financial analysis.
9. What is the worst type of shrinkage-employee theft or customer theft? What is your
reasoning?
Answer:
Employee theft: Occurs when employee steal merchandise where they work
Customer theft: Also known as shoplifting occurs when customers or individuals
disguised as customers steal merchandise from the retailer’s store
The above data shown that in countries such as China, Hong Kong and Japan,
sources of shrinkage highest percentage is from shoplifting. This proved that
customer theft is worse than employee theft.