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AM 270 Final Review Guide

by: Cayla Shaw

AM 270 Final Review Guide AM270

Cayla Shaw


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About this Document

Here are the answers to all of the highlighted questions on Dr. Yan's review guide.
Merchandising Processes
Dr. Yan
Study Guide
merchandising, Apparel and Merchandising, Design
50 ?




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This 3 page Study Guide was uploaded by Cayla Shaw on Tuesday May 10, 2016. The Study Guide belongs to AM270 at 1 MDSS-SGSLM-Langley AFB Advanced Education in General Dentistry 12 Months taught by Dr. Yan in Spring 2016. Since its upload, it has received 10 views.


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Date Created: 05/10/16
AM 270 Final Review Chapter 7 2. Planned sales are the foundation of a merchandise budget. 4. Sales per square foot are the dollars generated for each square foot of a particular store,  showroom, or other space. (Avg. of $250 psf) Calculation: Sales Per Square Foot = Sales / Square  Feet of Selling Space 6. Stock­to­sales ratio is the percentage of stock you had available for sale which was sold.  Calculation: Stock­to­Sales = Beginning of Month Stock ÷ Sales for the Month 10. Open­To­Buy is a means of controlling merchandise investment before and during a selling  period; planned merchandise to receive minus merchandise on order. Calculation: Open­to­buy  (OTB) = planned purchases ­ merchandise on order  13. Average inventory: Average inventory = EOM + BOM / 2 Planned purchases are calculated to provide the $ amount available to purchase new merchandise each month; purchases are generally preplanned for each month at retail value and then converted  by formula to a cost amount. Calculation: Planned Purchases = Planned Sales + Planned EOM +  Planned Reductions ­ BOM.  Open­to­buy ­ see #10. Chapter 8 3. Assortment volume is the total number of units in the assortment. Calculation: Assortment  volume = Merchandise Budget / Average Retail Price Volume per assortment factor is the number of units based on assortment factors.  Calculation: Volume per style, size, or color = units planned for the classification x percent  distribution for the assortment factor. Volume Per Sku: Volume Per SKU = # of units per style x % color x % size  4. Assortment diversity is the relationship between assortment volume and assortment depth;  measured by VSA. The smaller the VSA, the more diverse, the higher, the more focused. The more  focused the VSA, the higher the profits. Volume Per SKU for the assortment (VSA) is the the avg. number of units available per SKU. VSA = # of units / # of SKUs.  5. The relationship is: VSA increases, gross margin increases, VSA increases, lost sales  decreases; higher VSA, higher financial productivity. Chapter 11 2. Three options for sourcing are (1) Internal manufacturing, (2) External manufacturing, and (3)  Combo of both.      (1) Internal Manufacturing ­ manufacture products in firm's own plant     Advantages: more control over production, quality standards, response time/ flexibility.     Disadvantage: Large capital investment      (2) External Manufacturing ­ outside contractors used.     Advantages: less financial investment, lower labor cost, sources of expertise.     Disadvantages: higher support costs, communication and cultural challenges, quota and customs  problems. 5. Full Package Sourcing (FPS) ­ the contractor provides everything required to make the  garments: they purchase materials, develop samples, makes garments, and ships first­quality goods to the sourcing company.      A: Limited investment, limited technical knowledge required     D: Threat of knockoff, not much control over product Cut, Make, Trim (CMT) Sourcing ­ sourcing company provides design, product specs, and  materials.     A: control over design and raw materials, less threat of knockoff, flexibility.      D: big investment, much knowledge required 8. Throughput Time ­ the time it takes for an order to be processed from authorization to shipping  merchandise for sale. Firms can reduce throughput time through automation system, careful selection of sourcing  country/contractor, transportation system.  11. Square Meter Equivalents (SME) ­ the amount of fabric required to make a garment or a group  of garments. 14. Preliminary Inspection Certificate (PIC) ­ authorizes shipment of goods when they have  passed a final audit at the offshore contractor; required by the bank to release funds to pay the  contractor.  Bill of Lading (B/L) ­ a written receipt given by a carrier for goods accepted for transportation. Freight on Board (FOB) ­ the cost of the goods up to the time they are shipped.  Chapter 12 1. Process of relationship development  Awareness ↓ Exploration ↓↑ Expansion ’         ‘ Trust and Commitment         Dissolution 4. Source tagging ­ the application of electronic article surveillance; EAS labels into products or  packaging. Purpose is to reduce theft. 6. Forms of promotional support in vendor relationships are: corporate  advertising, premiums, product demonstration, samples, contests and drawings, etc. 


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