Attempt all the problems.
problem1) What are the main pricing strategies prevailing in retail industry today? describe and compare EDLP and high/low pricing strategies?
problem2) What is staple Merchandise buying system.
problem3) describe the following terms and discuss how they affect purchase order.
b. Trade discounts
c. Seasonal discounts
d. Advertising allowances
problem4) What is perpetual inventory and how is it different from Physical Inventory?
You are the merchandising manager of home furnishings division of the large urban department store. A year ago, floor coverings buyer resigned. After many interviews with applicants from both within and outside store, you decide to hire Frank Thomas, one of the assistant buyers for floor coverings department. Mr. Thomas is a young man who graduated from store’s executive training program five years ago. He has much less experience than some of the other applicants. Though, you were so impressed with his aggressiveness, intelligence, and regard in the eyes of his co-workers which you decided to go along with him. Naturally, since you are responsible for this choice you are concerned about results of his first full year’s operation.
The year has just ended and only information available is the data essential to find out the stock turnover:
Sales Inventory at Retail
January 1 - $100,000
January 31 $35,000 100,000
February 28 45,000 220,000
March 31 55,000 200,000
April 30 60,000 180,000
May 31 50,000 140,000
June 30 45,000 130,000
July 31 40,000 100,000
August 31 40,000 100,000
September 30 45,000 100,000
October 31 60,000 200,000
November 30 85,000 150,000
December 31 40,000 100,00
problem1) Compute the stock turnover.
problem2) What conclusions could you draw from the turnover?
problem3) What other information would you need to make the definite decision on the new buyer’s ability?