MKTG 351 CHAPTER 15

23. Long-term partnerships among channel members working together to reduce inefficiencies, costs, and redundancies in the entire marketing channel is called
a) supply chain management.
b) vertical channel integration.
c) industrial management.
d) industrial distribution.
e) marketing management.
a) supply chain management.
24. The Home Depot is trying to reduce transportation, information management, and administrative costs. To accomplish this goal, channel members need to
a) work independently.
b) avoid cooperation due to antitrust considerations.
c) work with competitors and share information.
d) increase competition among channel members.
e) cooperate and accommodate one another’s needs.
e) cooperate and accommodate one another’s needs.
25. The supply chain includes
a) producers, wholesalers, and retailers.
b) suppliers, producers, intermediaries, and customers.
c) suppliers and suppliers’ suppliers.
d) all entities that facilitate product distribution.
e) buyers, seller, marketing intermediaries, and agents.
d) all entities that facilitate product distribution.
26. Where do supply chains start?
a) Raw materials
b) Suppliers
c) Customers
d) Producers
e) Retailers
c) Customers
27. All members of the supply chain should determine their position in the chain, identify their partners and their roles, and establish partnerships whose focus is
a) shifting costs to suppliers.
b) maximizing costs.
c) maximizing technology implementation.
d) cooperation with competitors.
e) customer relationships.
e) customer relationships.
28. Wal-Mart is working with its suppliers, using tools such as electronic billing, purchase order verification, and bar code technology, to integrate data used to improve overall performance. This is an example of
a) supply chain management.
b) a vertical marketing system.
c) a horizontal marketing system.
d) channel conflict.
e) dual distribution.
a) supply chain management.
29. A group of organizations and individuals that directs the flow of products from producers to the ultimate consumers is called a
a) free trade association
b) marketing channel
c) channel of suppliers
d) production line-up
e) chain of retailers
b) marketing channel
30. A channel of distribution is defined as a group of individuals and organizations that
a) consumes about one-half of every dollar spent on products in the United States.
b) directs the flow of products from producers to customers.
c) links producers to other marketing intermediaries.
d) takes title to products and resells them.
e) manages transportation and warehousing functions.
b) directs the flow of products from producers to customers.
31. The driving force behind marketing channel decisions should be
a) convenience.
b) cost reduction.
c) environmental concerns.
d) customer satisfaction.
e) quality.
d) customer satisfaction.
32. What links producers to consumers through the purchase and reselling of products or contractual agreements?
a) Marketing intermediaries
b) Distributors
c) Suppliers
d) Middle marketers
e) Marketing channels
a) Marketing intermediaries
33. Most marketing channels have marketing intermediaries. A marketing intermediary’s role is to
a) link wholesalers to other wholesalers.
b) link producers to other middlemen or to consumers.
c) always sell products to wholesalers.
d) not take title to products.
e) always sell products to retailers.
b) link producers to other middlemen or to consumers.
34. Channel decisions are important to marketers mostly because
a) they are relatively flexible to change quickly.
b) consumers value reasonable prices delivered through marketing channels.
c) they dictate what promotional strategies companies should use.
d) many businesses are marketing intermediaries.
e) they involve long-term commitments and affect customer accessibility.
e) they involve long-term commitments and affect customer accessibility.
35. If Nokia decides to make changes in its marketing channels, the strategic significance is that channel decisions are
a) long-term commitments.
b) short-term commitments.
c) easier to change than prices.
d) easier to change than promotion.
e) impossible to change.
a) long-term commitments.
36. Having products available when the customer wants them is called
a) place utility.
b) time utility.
c) availability.
d) possession utility.
e) chronavailability.
b) time utility.
37. Marketing channels create three types of utility for consumers including
a) place, time, and possession.
b) location, availability, and suitability.
c) time, location, and promotion.
d) retailer, wholesaler, and producer.
e) position, possession, and place.
a) place, time, and possession.
38. Possession utility is best described as
a) products being available in places where the customers wish to purchase them.
b) the customer having access to the product to use now or store and use later.
c) having a company’s products available when a customer needs them.
d) being able to legally own a product despite restrictions on trade.
e) getting the products to the consumers in as short of time as possible for ownership.
b) the customer having access to the product to use now or store and use later.
39. Consumers receive the benefits of place utility when
a) they have to travel excessively to obtain products they want.
b) retailers remain open 24 hours a day.
c) they can stock up on products they need but not use them right away.
d) they make purchases with credit and debit cards.
e) products are available in locations where consumers want to buy them.
e) products are available in locations where consumers want to buy them.
40. In a simple economy of five producers and five consumers, there would be ___________ transactions possible without an intermediary and _________ transactions possible with one intermediary.
a) ten; twenty-five
b) thirty; ten
c) twenty-five; fifteen
d) sixteen; eight
e) twenty-five; ten
e) twenty-five; ten
41. Eliminating a wholesaler from a marketing channel will
a) cut costs and lower prices.
b) not eliminate the functions performed by that wholesaler.
c) eliminate the functions performed by that wholesaler.
d) lead to lower costs but higher prices.
e) reduce channel conflict.
b) not eliminate the functions performed by that wholesaler.
42. When three buyers purchase the products of three producers, nine transactions are required. If one intermediary serves both producers and buyers, the number of possible transactions is
a) fifteen.
b) five.
c) eighteen.
d) six.
e) twenty.
d) six.
43. Without wholesalers and other intermediaries,
a) most products would be much less expensive because fewer companies would be handling the product.
b) products would be cheaper because the functions of intermediaries would be eliminated.
c) products would likely be more expensive due to the use of less efficient channel members.
d) products would never be able to make it to the ultimate consumer at any price without passing through intermediaries.
e) many products would be more expensive because retailers would expect more profit.
c) products would likely be more expensive due to the use of less efficient channel members.
44. Customers who purchase computer laptops from manufacturer websites are acquiring products through
a) the most efficient channel of distribution.
b) the most common type of marketing channel.
c) a direct-marketing channel.
d) a business-to-business channel of distribution.
e) an indirect-marketing channel.
c) a direct-marketing channel.
45. Select Comfort, a producer of adjustable air mattresses, sells most of its products through direct mail sales and Internet sales. This channel would be classified as
a) direct distribution.
b) producer, retailer, consumer.
c) telemarketing.
d) direct-marketing.
e) indirect marketing.
d) direct-marketing.
46. Many producers selling on the Internet are using
a) several intermediaries.
b) complex marketing channels.
c) Internet wholesalers, retailers, and agents.
d) supply chain channels.
e) direct-marketing channels.
e) direct-marketing channels.
47. After direct-marketing, the next slightly longer marketing channel adds a(n)
a) retailer.
b) producer.
c) wholesaler.
d) agent.
e) consumer.
a) retailer.
48. When Sophie buys organic produce for her household using a channel with only one intermediary, that intermediary is classified as a
a) retailer.
b) wholesaler.
c) broker.
d) functional middleman.
e) producer.
a) retailer.
49. Large retailers such as J.C. Penney’s and Target are most likely to participate in which of the following channels?
a) Producer, industrial distributors, retailers, consumers
b) Producer, consumers
c) Producer, wholesalers, retailers, consumers
d) Producer, retailers, consumers
e) Producer, agents, wholesalers, retailers, consumers
d) Producer, retailers, consumers
50. The marketing channel of producer to retailer to consumer is most likely to be used by producers of which of the following products?
a) Chewing gum
b) Tobacco
c) Automobiles
d) Hardware
e) Saltine crackers
c) Automobiles
51. Nationally distributed consumer convenience products are most likely distributed through which of the following channels?
a) Producer, consumers
b) Producer, agents, wholesalers, retailers, consumers
c) Producer, wholesalers, consumers
d) Producer, wholesalers, retailers, consumers
e) Producer, industrial distributor, wholesalers, retailers, consumers
d) Producer, wholesalers, retailers, consumers
52. Manufacturers of convenience products such as chewing gum reach customers through thousands of retailers. What marketing channel are these manufacturers most likely to use?
a) Producer, consumer
b) Producer, wholesaler, retailer, consumer
c) Producer, wholesaler, agent, retailer, consumer
d) Producer, retailer, consumer
e) Retailer, consumer
b) Producer, wholesaler, retailer, consumer
53. Which of the following is the most commonly used channel for distributing business products?
a) Producer, agents, industrial distributors, organizational buyers
b) Producer, industrial distributors, organizational buyers
c) Producer, agents, organizational buyers
d) Producer, organizational buyers
e) Industrial distributors, organizational buyers
d) Producer, organizational buyers
54. Steelcase, Inc. markets furniture directly to businesses. This is an example of a(n) _________ channel.
a) producer-to-business buyer
b) producer-to-industrial-distributor-to-business buyer
c) producer-to-agent-to-business buyer
d) equipment
e) consumer
a) producer-to-business buyer
55. Organizational buyers are especially partial to direct marketing channels when
a) they buy cheap materials in large quantities.
b) they try a new product for the first time.
c) they are filling an order for a very important customer.
d) a modified rebuy type of decision is involved.
e) expensive and/or complex equipment is involved.
e) expensive and/or complex equipment is involved.
56. Caruthers Paint Manufacturing Company buys the chemicals it needs for producing its products from a chemical producer, Roth Chemicals. In this instance, the chemicals are being distributed to Caruthers through which of the following types of channels?
a) Industrial distributor
b) Direct distribution
c) Retail
d) Wholesaler-sponsored
e) Producer
b) Direct distribution
57. An independent business that takes title to products and carries inventories is a(n)
a) industrial distributor.
b) intermediary.
c) agency.
d) wholesaler.
e) producer.
a) industrial distributor.
58. Jeff Wood’s company buys machine tools from large producers and sells them to several Midwestern manufacturing companies. The company Jeff works for carries inventories of the tools, which reduces capital requirements for the producers. Jeff’s company is an example of a(n) ___________ in a distribution channel.
a) direct distributor
b) manufacturers’ agent
c) industrial distributor
d) producers’ agent
e) wholesalers’ agent
c) industrial distributor
59. Which of the following is most likely to be a product stocked by an industrial distributor?
a) Tires
b) Exercise equipment
c) Screws
d) Countertops
e) Bananas
c) Screws
60. Which of the following describes a disadvantage of using industrial distributors?
a) Industrial distributors possess considerable market information.
b) Their marketing exchange relationships are very focused.
c) They are unlikely to handle bulky items or items that are slow sellers.
d) Industrial distributors sell specific brands aggressively.
e) Industrial distributors acquire title to the products and take possession.
c) They are unlikely to handle bulky items or items that are slow sellers.
61. Which of the following is an advantage of using an industrial distributor?
a) These firms are easy to control because they work directly for the producers.
b) Inventory holding costs are minimized because they can store inventory very cheaply.
c) They are closer geographically to all of the producers’ customers.
d) They possess a high level of technical knowledge about their products.
e) They help reduce a producer’s financial burdens by extending credit to customers.
e) They help reduce a producer’s financial burdens by extending credit to customers.
62. A producer is not likely to receive _____ from an industrial distributor.
a) selling activities in local markets
b) market information about consumers
c) aggressive promotion of its brand
d) reduced capital requirements
e) a reduced financial burden from customers
c) aggressive promotion of its brand
63. A channel that includes both a manufacturers’ agent and an industrial distributor is appropriate under which of the following circumstances?
a) When the firm wants specialized personnel to follow up the work of the sales force
b) When the marketer wishes to enter a new geographic market but does not wish to expand the existing sales force
c) When only one or two channels of distribution are available for products
d) When the sales force is large and the marketer is thinking of cutting it down
e) When customers are highly concentrated in one geographic area
b) When the marketer wishes to enter a new geographic market but does not wish to expand the existing sales force
64. Rob Stevens is the head of a company that produces computer software for production scheduling. The firm is small and presently does not generate enough volume to justify hiring a sales force. The firm is probably using ___________ to maintain contact with the firms using its products.
a) wholesalers
b) brokers
c) agents
d) merchants
e) retailers
c) agents
65. An independent businessperson who is paid a commission to sell complementary products of different producers in an assigned territory without actually taking title of the merchandise is a(n)
a) sole intermediary.
b) manufacturers’ agent.
c) producers’ broker.
d) industrial distributor.
e) channel facilitator.
b) manufacturers’ agent.
66. What is a primary difference between an industrial distributor and a manufacturers’ agent?
a) A manufacturers’ agent does not acquire title nor usually take possession of the products whereas an industrial distributor does.
b) A manufacturers’ agent is employed by the manufacturers while an industrial distributor is independent.
c) An industrial distributor is employed by the manufacturers while a manufacturers’ agent is independent.
d) A manufacturers’ agent rarely adds any value to the marketing channel while an industrial distributor reduces costs significantly.
e) An industrial distributor does not form relationships with customers for repeat business whereas a key asset of a manufacturers’ agent is his knowledge of his customers.
a) A manufacturers’ agent does not acquire title nor usually take possession of the products whereas an industrial distributor does.
67. Del Monte markets ketchup for household use to supermarkets through grocery wholesalers. It markets ketchup for institutional use through industrial distributors and food brokers. Del Monte is using
a) dual distribution.
b) industrial distribution.
c) strategic channel alliance.
d) supply chain management.
e) an unethical marketing channel.
a) dual distribution.
68. Many companies use more than one marketing channel to distribute their products to the same target market, a tactic called
a) multiple channeling.
b) strategic channel alliance.
c) intensive distribution.
d) dual distribution.
e) market splitting.
d) dual distribution.
69. Gateway Computer makes computers available through its own stores, its toll-free telephone line, and a website. This is an example of
a) dual distribution.
b) vertical integration.
c) horizontal integration.
d) tying agreements.
e) exclusive dealing.
a) dual distribution.
70. Starbucks has an agreement with Pepsi Co. through which Pepsi distributes Starbucks’ coffee drink, Frappucino, to grocery stores and other retail outlets. This is an example of
a) a strategic channel alliance.
b) exclusive distribution.
c) dual distribution.
d) horizontal channel integration.
e) channel leadership.
a) a strategic channel alliance.
71. Which of the following is least likely to be a factor affecting the selection of marketing channels?
a) Customer characteristics
b) Product attributes
c) Product packaging
d) Competition
e) Environmental forces
c) Product packaging
72. Fragile products that require special handling are more likely to be distributed through
a) longer channels.
b) shorter channels.
c) Channel D.
d) Channel H.
e) exclusive outlets.
b) shorter channels.
73. When considering the best channel to use, all of the following are true with regard to larger firms except they
a) can use an extensive product mix as a competitive tool.
b) may be better able to negotiate better deals with vendors or other channel members.
c) may have more distribution centers.
d) may have the resources to develop their own sales force.
e) may be better suited to serve customers in a particular region.
e) may be better suited to serve customers in a particular region.
74. The three major levels of intensity at which a company can choose to distribute its products are _____ distribution.
a) narrow, medium, and wide
b) cooperative, conflicting, and integrated
c) intensive, extensive, and exclusive
d) selective, cooperative, and conflicting
e) exclusive, selective, and intensive
e) exclusive, selective, and intensive
75. When Busch Light Beer was introduced as part of the Anheuser-Busch product line, the company most likely used ___________ distribution.
a) horizontal
b) intensive
c) selective
d) agent
e) exclusive
b) intensive
76. Producers of convenience products such as soft drinks, toothpaste, and breath mints are most likely to use _____ distribution.
a) selective
b) extensive
c) intensive
d) exclusive
e) demand-based
c) intensive
77. Candy bars and chewing gum are most likely to be distributed through _____ and _____.
a) selective distribution; multiple channels
b) intensive; dual distribution
c) strategic channel alliances; intensive
d) exclusive; a single channel
e) dual distribution; convenience channels
b) intensive; dual distribution
78. Sales are most likely to have a direct relationship to product availability for products that use _____ distribution.
a) selective
b) dual
c) intensive
d) extensive
e) exclusive
c) intensive
79. In marketing a new line of nursery furniture for infants and small children, the Fisher Company will most likely use ___________ distribution for the products.
a) intensive
b) exclusive
c) horizontal
d) priority
e) selective
e) selective
80. Using only some of the available outlets to distribute a product is called
a) selective distribution.
b) intensive distribution.
c) channel conflict.
d) vertical channel integration.
e) exclusive distribution.
a) selective distribution.
81. Durable goods such as television sets and DVD players generally reach their target markets through
a) intensive distribution.
b) channel cooperation.
c) direct marketing.
d) exclusive distribution.
e) selective distribution.
e) selective distribution.
82. Product and target market characteristics usually determine the type of coverage a product receives. For which of the following products is selective distribution most appropriate?
a) Gasoline
b) Jaguar automobiles
c) Cigarettes
d) Laundry detergent
e) Panasonic stereos
e) Panasonic stereos
83. Honey Farms is a maker of fine chocolates. The company’s latest product, Fudge-Dipped Strawberries, is the premier product in its Fudge-Dipped line. The product is very expensive and targeted to upscale consumers. Which form of distribution would Honey Farms be likely to use for its new product?
a) Intensive
b) Selective
c) Targeted
d) Exclusive
e) Premier
d) Exclusive
84. Expensive, high-quality products that are purchased infrequently often reach consumers through
a) selective distribution.
b) highly-selective distribution.
c) sole-source retailers.
d) complex marketing channels.
e) exclusive distribution.
e) exclusive distribution.
85. For which of the following products would exclusive distribution be most appropriate?
a) Gasoline
b) Rolls Royce automobile
c) Washing machine
d) Laundry detergent
e) Moderately priced luggage
b) Rolls Royce automobile
86. Because Coke is such a popular product and the company is so powerful, Coca-Cola is in a position to exert considerable control over channel structures and the way Coke is marketed. This is an illustration of channel ___________ in the distribution channel.
a) conflict
b) leadership
c) dominance
d) cooperation
e) negotiation
b) leadership
87. A single leader who controls and organizes a marketing channel is called a
a) channel champion.
b) distribution leader.
c) marketing maverick.
d) channel captain.
e) lead distributor.
d) channel captain.
88. Nike maintains a good deal of control over how its products are promoted, displayed, and sold. Because of this control, Nike would be appropriately described as the channel
a) intermediary.
b) captain.
c) allocator.
d) terminator.
e) price leader.
b) captain.
89. Few supermarkets would try to replace a national brand of baby food with their own brand. Assuming that this is true, we have a good example of channel leadership by
a) wholesalers.
b) producers.
c) retailers.
d) agents.
e) brokers.
b) producers.
90. When one company in a marketing channel has the ability to influence another member’s goal achievement, the company has
a) channel control.
b) channel power.
c) marketing leadership.
d) a channel captain.
e) distributive influence.
b) channel power.
91. If Ralston Purina forced Kroger’s grocery chain to place all of its products in the stores’ most favorable locations, it would be
a) demonstrating sound channel leadership.
b) insisting on exclusive exposure.
c) exercising channel power.
d) minimizing channel conflict.
e) creating a coordinate system.
c) exercising channel power.
92. Overall channel goals and individual channel member goals cannot be achieved together without
a) conflict.
b) captains.
c) leadership.
d) cooperation.
e) tying agreements.
d) cooperation.
93. Marketing channel members are likely to experience misunderstandings, frustration, and poorly coordinated strategies as a result of
a) channel conflict caused by inefficient communication between channel members.
b) open communication among the channel members.
c) methods of channel coordination designed to reduce ambiguity.
d) negotiating territorial issues among regional distributors of a product.
e) allowing one member of the channel to take the role of channel captain.
a) channel conflict caused by inefficient communication between channel members.
94. When produce companies such as Dole Tomatoes bypass wholesalers and sell directly to retailers, it is likely to create channel ___________ between Dole and these wholesalers.
a) conflict
b) cooperation
c) leadership
d) integration
e) flows
a) conflict
95. Goodyear allows companies like Sears and Discount Tire to distribute and discount its tires. This action significantly increases the possibility of channel ___________ with independent Goodyear dealers.
a) understanding
b) power
c) leadership
d) communication
e) conflict
e) conflict
96. If a wholesaler continually emphasizes and promotes one company’s products over a competing company’s products, _____ is likely to result.
a) channel cooperation
b) vertical channel integration
c) channel conflict
d) horizontal channel integration
e) channel leadership.
c) channel conflict
97. Vertical channel integration
a) results in two or more different management teams for each member of the channel.
b) is made possible when a large corporation divests itself of smaller subsidiaries.
c) is a shift back to the conventional channel of distribution.
d) combines institutions at the same level of operation.
e) is made possible by purchasing the operations of a link in the channel.
e) is made possible by purchasing the operations of a link in the channel.
98. When a single channel member manages an integrated marketing channel to achieve low-cost, efficient distribution for satisfying target markets, ______ exists.
a) a vertical marketing system
b) horizontal channel integration
c) channel power
d) channel cooperation
e) extensive distribution
a) a vertical marketing system
99. Warner Bros. sells cookie jars, puzzles, photo albums, and other items featuring its popular cartoon characters directly through its own retail outlets. This is an example of
a) channel leadership.
b) channel cooperation.
c) channel conflict.
d) horizontal channel integration.
e) vertical channel integration.
e) vertical channel integration.
100. The reasons a vertically integrated channel can be more effective against competition is because of all of the following except
a) the consolidation of power.
b) tightly controlled and bureaucratic management style.
c) the ability to inhibit competitors.
d) the sharing of responsibilities and information.
e) increased bargaining power.
b) tightly controlled and bureaucratic management style.
101. Bennetton, a leading manufacturer of knitwear in Italy, expanded its operations to include retail outlets in the United States and South America. This type of integration is called
a) horizontal.
b) vertical.
c) multilevel.
d) retail.
e) merchandising.
b) vertical.
102. When Benetton, the Italian sportswear designer and manufacturer, decided to open its own specialty shops to sell its merchandise, the firm was engaging in
a) channel repetition.
b) vertical channel integration.
c) channel conflict.
d) horizontal channel integration.
e) channel expansion.
b) vertical channel integration.
103. The Limited, which produces and retails clothing products in a coordinated channel, is an example of a(n)
a) administered vertical marketing system.
b) conventional marketing channel.
c) channel network.
d) contractual marketing channel.
e) corporate vertical marketing system.
e) corporate vertical marketing system.
104. When channel members are linked by legal agreements that specify each member’s rights and responsibilities, _______ exists.
a) horizontal channel integration
b) an administered VMS
c) a corporate VMS
d) a channel captain
e) a contractual VMS
e) a contractual VMS
105. In an administered vertical marketing system (VMS), interorganizational relationships are
a) achieved by informal coordination.
b) formalized through contracts.
c) combined under the ownership of a single organization.
d) guided by legal agreements.
e) achieved by clearly defining the obligations and rights of all channel members.
a) achieved by informal coordination.
106. In an administered VMS, informal coordination brings about a high level of interorganizational management. Nonetheless,
a) decision making does not take into account the goals of the system.
b) the channel members do not remain autonomous.
c) the decision making is not coordinated.
d) the channel members remain autonomous.
e) the goals of the individual firms are not congruent with the goals of the system.
d) the channel members remain autonomous.
107. In the distribution channel for Domino’s Pizza, channel members are linked by legal agreements that spell out the obligations and rights of each member. This is an example of a(n) ___________ vertical marketing system.
a) contractual
b) administered
c) corporate
d) negotiated
e) institutional
a) contractual
108. The Wicks ‘N Sticks candle and gift marketing organization has a(n) ___________ vertical marketing system arrangement with its franchised retail store operations.
a) corporate
b) administered
c) negotiated
d) contractual
e) horizontal
d) contractual
109. Select the greatest advantage of horizontal channel integration.
a) The flexibility of the channel is decreased.
b) The markets are more heterogeneous.
c) The expanded number of units is coordinated.
d) Efficiencies in advertising, marketing research, and purchasing are increased.
e) Planning and research are increased to cope with increased competition.
e) Planning and research are increased to cope with increased competition.
110. To expand the number of its retail outlets in the Washington, D.C., area, the Dress Barn bought out a small chain of women’s apparel stores in northern Virginia. This type of integration is called
a) vertical.
b) retail.
c) horizontal.
d) backward.
e) forward.
c) horizontal.
111. Order processing, inventory management, materials handling, warehousing, and transportation are the activities that define
a) wholesaling.
b) retailing.
c) physical distribution.
d) channel management.
e) drop shipping.
c) physical distribution.
112. The notion of physical distribution is
a) speed of delivery.
b) used only by manufacturers.
c) the movement of products from producers to end users.
d) primarily the wholesaler’s responsibility.
e) an assessment of distribution costs.
c) the movement of products from producers to end users.
113. The contracting of physical distribution tasks to third parties who do not have managerial authority within the marketing channel is known as
a) illegal.
b) logistics.
c) warehousing.
d) wholesaling.
e) outsourcing.
e) outsourcing.
114. If a firm decides to contract its physical distribution functions to third parties that have no managerial authority within the marketing channel, it is using
a) outsourcing.
b) sole-sourcing.
c) logistics.
d) wholesaling.
e) distribution services.
a) outsourcing.
115. Physical distribution activities may be performed by a producer, wholesaler, retailer or
a) not performed at all.
b) the customer.
c) investors in any of the previous three.
d) solely through technology.
e) they may be outsourced.
e) they may be outsourced.
116. As her Internet quilt and bed linen business grew, Danielle could no longer perform all the distribution activities, so she hired a shipper and an information technology firm to assist with these functions. Danielle is using _____ for physical distribution for her business.
a) producers
b) wholesalers
c) retailers
d) selling agents
e) outsourcing
e) outsourcing
117. The main objective of physical distribution should be to
a) decrease costs while increasing market coverage.
b) increase service and market coverage.
c) decrease costs while increasing service.
d) increase market coverage and channel power.
e) balance costs and market coverage.
c) decrease costs while increasing service.
118. The best way to reduce overall distribution costs is to
a) use a total-cost approach to analyze and evaluate the entire system.
b) minimize the costs associated with materials handling and transportation.
c) reduce the number of distribution functions that are necessary.
d) find the cheapest price for each function and use them to create the system.
e) lower the service standards that the company has.
a) use a total-cost approach to analyze and evaluate the entire system.
119. According to the text, physical distribution cost tradeoffs enable firms to
a) resolve pricing conflicts among channel partners.
b) minimize risk during test marketing of new products.
c) reduce costs of all distribution functions simultaneously.
d) resolve pricing conflicts within industry sectors.
e) utilize resources for greatest cost-effectiveness.
e) utilize resources for greatest cost-effectiveness.
120. At the annual managers’ planning conference, Jackie Conrad asks the other managers to consider her proposal to increase the quantity of inventory to a five-week supply in order to increase the percentage of completely filled customer orders from 85 percent to 90 percent. She states that she is willing to trade off the ___________ incurred for the positive effect of better customer service.
a) lower response time
b) higher warehousing costs
c) higher transportation costs
d) higher order processing costs
e) higher performance levels
b) higher warehousing costs
121. An important goal of physical distribution is reducing the time it takes to complete
a) inventory management.
b) outsourcing evaluation.
c) electronic data interchange.
d) order processing.
e) cycle time.
e) cycle time.
122. The United States Postal Service works hard to get priority mail from the sender to the recipient as quickly as possible in order to compete with companies such as UPS and FedEx. The postal service works to reduce
a) cycle time.
b) order processing.
c) turn-around.
d) shipping time.
e) transportation.
a) cycle time.
123. A goal of physical distribution is to reduce ______ or how long it takes to complete a process.
a) time standards
b) processing time
c) production
d) throughput measure
e) cycle time
e) cycle time
124. Order processing is defined as
a) the receipt and transmission of sales order information.
b) the second stage in a physical distribution system.
c) the four main tasks.
d) the same as order handling.
e) electronic processing of information.
a) the receipt and transmission of sales order information.
125. What are the three primary tasks of order processing?
a) Order receipt, order delivery, order follow-up
b) Order handling, inventory management, order delivery
c) Materials handling, warehousing, order delivery
d) Order handling, order entry, order delivery
e) Order receipt, order checking, order delivery
d) Order handling, order entry, order delivery
126. By receiving orders online instead of through a paper-based ordering system, Barnes and Nobles has been able to save time and money on
a) electronic data interchange.
b) order entry.
c) inventory management.
d) order delivery.
e) order handling.
b) order entry.
127. The order-processing task that involves verifying product availability, checking prices and customer credit ratings, and filling orders is
a) warehousing.
b) order handling.
c) information processing.
d) materials handling.
e) order entry.
b) order handling.
128. Order handling involves all of the following activities except that the
a) credit department approves the purchase.
b) order is transmitted to the warehouse.
c) availability of product is verified.
d) warehouse is instructed to fill the order.
e) customer places a purchase order.
e) customer places a purchase order.
129. A commonly used computerized means of integrating order processing with production, inventory, accounting, and transportation is
a) web-based inventory management.
b) just-in-time.
c) electronic data interchange.
d) universal product codes.
e) activity based management.
c) electronic data interchange.
130. Nathan is trying to decide which shipping company to use to transport his custom-made furniture to customers. Nathan is facing a decision about
a) order entry.
b) order completion.
c) just-in-time.
d) order handling.
e) order delivery.
e) order delivery.
131. Because of the significant investment many companies have in the products they sell to customers, they must develop and maintain adequate varieties of products to meet their customers’ needs. This is called
a) just-in-time.
b) order processing.
c) inventory management.
d) merchandise stocking.
e) logistical management.
c) inventory management.
132. Greg Braddock is a physical distribution manager. He is currently developing and maintaining assortments of products that are adequate for customer demand. In which stage in the physical distribution system is Greg currently involved?
a) Order processing
b) Materials handling
c) Inventory management
d) Transportation
e) Warehousing
c) Inventory management
133. The result of an inventory stockout is usually an increase in
a) inventory costs.
b) lost sales.
c) net profit.
d) customers.
e) prices.
b) lost sales.
134. Anna Wren, sales manager for Pacific Lumber, tells Jason Peoples, the firm’s inventory manager, that the firm’s failure to have adequate supplies of pressure-treated lumber on hand has cost the firm $175,000 in lost sales. This figure represents which of the following inventory management costs?
a) Carrying
b) Replenishment
c) Stockout
d) Safety stock
e) Reorder
c) Stockout
135. What is the reorder point if the usage rate is 10 units per day, the order lead time is five days, and the safety stock is 30?
a) 50
b) 150
c) 80
d) 200
e) 400
c) 80
136. A manufacturer has decided to improve its inventory management by maintaining low inventory levels and waiting to purchase materials until right before they are needed in production. This inventory management technique is called
a) just-in-time (JIT).
b) time management.
c) inventory minimization.
d) economic order quantity.
e) reorder point maximization.
a) just-in-time (JIT).
137. Eric is concerned about not having enough air conditioning units in inventory during June, July, and August so he keeps extra inventory to guard against stockouts during this critical period. Eric is keeping
a) short order lead times.
b) just-in-time inventory.
c) a controlled usage rate.
d) safety stock.
e) excessive inventory.
d) safety stock.
138. All of the following are concepts used in a just-in-time inventory management system except
a) supplies arrive just as they are needed.
b) safety stock is kept to reduce stockouts.
c) much waste is eliminated.
d) purchases are made in small quantities.
e) purchases are made frequently.
b) safety stock is kept to reduce stockouts.
139. Justin Abercrombie attends a seminar on just-in-time inventory management. Excited about the idea, he returns to his office at Atlanta Auto Supply to start designing such an inventory system. Which of the following steps must Justin take as he institutes this change?
a) Increase safety stock
b) Raise the reorder point
c) Reduce customer service standard
d) Increase order frequency
e) Reduce estimates of inventory turnover rate
d) Increase order frequency
140. What is the primary determinant in deciding how materials will be handled?
a) Unit loading
b) Containerization
c) Customer preference
d) Cost reduction
e) Product characteristics
e) Product characteristics
141. Johnson Controls hires a consultant to assess its materials handling procedures. The consultant recommends the implementation of ___________ if they want easier movement of items between internal destinations in the warehouse.
a) unit loading
b) piggybacking
c) containerization
d) inventory management
e) priority transportation
a) unit loading
142. Federal Mogul places several boxes of products or materials on pallets in order to load them efficiently using forklifts. This system of materials handling is called
a) warehousing.
b) containerization.
c) group storage.
d) unit loading.
e) mechanized handling.
d) unit loading.
143. Fansteel manufactures parts used in jet engines, which it sells to companies such as Boeing. When shipping products to Boeing, Fansteel seals the parts in 8′ × 8′ × 40′ boxes for shipping to decrease loss and damage. This method of materials handling is
a) unit loading.
b) containerization.
c) freight forwarding.
d) unitized shipping.
e) bonded packaging.
b) containerization.
144. Managers and consultants at Colgate-Palmolive are meeting to discuss better ways to package its products to reduce damage and make loading more efficient. The primary function they are trying to improve is
a) warehousing.
b) inventory management.
c) materials handling.
d) cycle time.
e) containerization.
c) materials handling.
145. Which of the following physical distribution functions involves design and operation of facilities for storing goods?
a) Order processing
b) Materials handling
c) Transportation
d) Warehousing
e) Inventory management
d) Warehousing
146. What function of physical distribution enables companies to compensate for dissimilar production and consumption rates and stabilize prices and availability of seasonal items?
a) Materials handling
b) Warehousing
c) Transportation
d) Inventory management
e) Order processing
b) Warehousing
147. Morgan Steel Company leases a warehouse in Jacksonville, Alabama to serve Deep South markets that were large enough and stable enough to make a long-term commitment to fixed facilities. This is a
a) flexible warehouse.
b) dispatching center.
c) distribution center.
d) private warehouse.
e) public warehouse.
d) private warehouse.
148. When companies operate their own facilities for storing and shipping products, these facilities are known as
a) distribution centers.
b) product storehouses.
c) public warehouses.
d) megawarehouses.
e) private warehouses.
e) private warehouses.
149. Air-Tech management learns that last month’s production run of heaters at its Newark plant is defective and announces a recall of the specific models produced. To handle the large number of products it expects to receive for replacement of the defective thermostats, Air-Tech will probably need to add a ___________ to its distribution network.
a) distribution center
b) private warehouse
c) dispatching shipment system
d) public warehouse
e) materials handling system
d) public warehouse
150. A public warehouse is a
a) business that leases storage space and related facilities for distribution to other firms.
b) large, centralized warehouse that focuses on moving rather than storing goods.
c) company that provides a complete array of logistical services for businesses.
d) company-operated facility for storing and shipping products.
e) warehouse used to store the personal property of many different customers.
a) business that leases storage space and related facilities for distribution to other firms.
151. Garcia Wholesale Plumbing has seen its sales in the Southeast triple in the past two years. Materials handling director Barb Peterson announces plans to the board for an Atlanta facility that will combine shipments received from Garcia’s 25 suppliers for nearly immediate shipment to plumbing stores and contractors in the region. This new facility would be best classified as which of the following?
a) Sales office
b) Public warehouse
c) Field public warehouse
d) Distribution center
e) Bonded warehouse
d) Distribution center
152. What is the most expensive physical distribution function?
a) Warehousing
b) Order processing
c) Inventory management
d) Transportation
e) Materials handling
d) Transportation
153. ___________ adds time and place utility to a product by moving it from where it is made to where it is purchased and used.
a) Warehousing
b) Containerization
c) Distribution
d) Materials handling
e) Transportation
e) Transportation
154. Which major mode of freight transportation provides the most flexible schedules and routes?
a) Trucks
b) Waterways
c) Airways
d) Pipelines
e) Railroads
a) Trucks
155. Which mode of transportation hauls more freight than any other?
a) Railroads
b) Waterways
c) Pipelines
d) Trucks
e) Airways
a) Railroads
156. Magnetic Springs wants to ship its bottled water with the most flexible schedules and routes of all transportation modes. Magnetic Springs should use ___________ as its transportation mode.
a) railroads
b) waterways
c) pipelines
d) trucks
e) airways
d) trucks
157. If a microchip in a computer in New York failed, which method of transportation would be most appropriate to use to replace the chip immediately if one could get the new chip only from Silicon Valley, California?
a) Pipeline
b) Airways
c) Waterways
d) Truck
e) Railroad
b) Airways
158. Kolder Inc. is using a new just-in-time inventory management system that requires ordering smaller quantities of parts more frequently. The success of its business depends significantly on receiving these parts very quickly, so like many other companies using just-in-time, Kolder Inc. is relying more on the ______ mode of transportation despite its expense.
a) railroad
b) pipeline
c) airway
d) truck
e) waterway
c) airway
159. The Diamond Salt Company needs to transport 20 tons of salt from Baton Rouge, Louisiana, to Cincinnati. Which of the following methods would be the cheapest for transporting this cargo?
a) Pipelines
b) Waterways
c) Trucks
d) Airways
e) Railroads
b) Waterways
160. Assuming everything else equal, the most cost-efficient way for British Petroleum to transport crude oil from remote oil drilling sites in central Alaska to shipping terminals on the Alaskan coast would be
a) waterways.
b) airways.
c) tanker trucks.
d) railroads.
e) pipelines.
e) pipelines.
161. ___________ is the combining and coordinating of two or more modes of transportation to take advantage of benefits offered by each of the different types of carriers.
a) Intermodal transportation
b) Physical distribution
c) Containerized movement
d) Efficient transportation
e) Freight forwarding
a) Intermodal transportation
162. Piggyback, fishyback, and birdyback are terms usually associated with gaining efficiency in shipping through
a) transit time.
b) warehousing.
c) packaging.
d) containerization.
e) lot sizes.
d) containerization.
163. What two modes of transportation are used when containers are shipped by piggyback?
a) Railroads and airways
b) Trucks and airways
c) Pipelines and trucks
d) Waterways and railroads
e) Railroads and trucks
e) Railroads and trucks
164. Which of the following organizations consolidates shipments from several firms into more efficient lot sizes?
a) Freight forwarder
b) Forwarding agency
c) Transporter
d) Special transportation company
e) Intermodal shipping company
a) Freight forwarder
165. Freight transportation companies that offer several different shipment methods are called
a) megacarriers.
b) intermodal transporters.
c) freight forwarders.
d) shipping experts.
e) superfreighters.
a) megacarriers.
166. Using a freight forwarder usually
a) is not economical for a small firm.
b) increases transit time and shipping costs.
c) increases transit time and sometimes lowers shipping costs.
d) lowers shipping costs for a large firm.
e) reduces transit time.
e) reduces transit time.
167. Dual distribution is characterized as
a) illegal under the Robinson-Patman Act.
b) distribution channels that typically carry exclusive products, such as Rolex watches.
c) marketing environments that are highly competitive.
d) manufacturers that forbid an intermediary to carry products of competing producers.
e) distribution of one manufacturer’s product through two or more different channel structures.
e) distribution of one manufacturer’s product through two or more different channel structures.
168. In which of the following situations is dual distribution likely to be determined illegal?
a) A manufacturer sells its product online and through independent and company-owned retail outlets.
b) A manufacturer opens its own retail outlets across the country and sells its entire line of products.
c) A producer uses company outlets to dominate independent retailers that carry its products.
d) A producer sells its products both to wholesalers who deal with small and medium-sized retailers and directly to retailers.
e) A producer charges higher prices at its company-owned retail outlets than independent retailers charge for the same products.
c) A producer uses company outlets to dominate independent retailers that carry its products.
169. Ralph Lauren sells Polo products through department stores as well as in its own specialty shops. The designer uses ___________ as a channel strategy.
a) channel extension
b) intermediary exclusion
c) broker utilization
d) dual distribution
e) channel diversification
d) dual distribution
170. The main reason a manufacturer will prohibit intermediaries from selling its products outside designated sales territories is to
a) tighten its control over distribution of its products.
b) discourage competition from other manufacturers.
c) incorporate selective distribution.
d) contain distribution costs.
e) punish intermediaries for past behavior.
a) tighten its control over distribution of its products.
171. Tying agreements occur when a
a) producer distributes the same product through two or more different channels.
b) manufacturer forbids an intermediary to carry products of competing manufacturers.
c) supplier furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well.
d) producer refuses to deal to channel members that seem unethical or illegitimate.
e) manufacturer prohibits intermediaries from selling its products outside designated sales territories.
c) supplier furnishes a product to a channel member with the stipulation that the channel member must purchase other products as well.
172. An arrangement where a producer forbids an intermediary to carry products made by competing manufacturers is called
a) exclusive distribution.
b) a tying agreement.
c) refusal to deal.
d) contractual VMS.
e) exclusive dealing.
e) exclusive dealing.
173. Dell Computers is a nationally recognized manufacturer of computers for the small business and home markets. If Dell were to order one of its wholesalers not to carry any computer products other than those made by Dell, this arrangement would be called
a) a tying contract.
b) refusal to deal.
c) a restricted sales territory.
d) a restricted channel.
e) exclusive dealing.
e) exclusive dealing.
174. If an intermediary wants to carry Tide detergent and Procter & Gamble agrees only if the supplier purchases P&G’s entire line of detergents as well, the company is engaging in which of the following channel management practices?
a) Exclusive dealing
b) Dual distribution
c) Tying agreement
d) Refusal to deal
e) Restricted sales territories
c) Tying agreement
175. If Anheuser-Busch refused to allow Jackson Distributing to carry its product if the distributor also carried Miller Brewing products, the company would have been engaging in which of the following channel management practices?
a) Exclusive dealing
b) Dual distribution
c) Tying contacts
d) Refusal to deal
e) Restricted sales territories
a) Exclusive dealing