Unit 11: Distribution Decisions - Practice Quiz

DEMKT503 — Marketing Management 60 Questions
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1 Which decision identifies the people or organizations that will distribute a product?

Decisions involved in setting up the channel Easy
A. Designing product labels
B. Selecting channel members
C. Choosing advertising media
D. Setting product prices

2 What does channel length refer to?

Decisions involved in setting up the channel Easy
A. Duration of the sales period
B. Number of channel levels
C. Distance to the market
D. Number of products sold

3 A company that sells directly to customers uses which type of channel?

Decisions involved in setting up the channel Easy
A. Dual wholesale channel
B. Long channel
C. Indirect channel
D. Direct channel

4 Which strategy involves selling products through as many outlets as possible?

Channel management strategies Easy
A. Selective distribution
B. Exclusive distribution
C. Restricted distribution
D. Intensive distribution

5 Exclusive distribution usually gives selling rights to:

Channel management strategies Easy
A. A limited number of sellers
B. All competing wholesalers
C. Only the final consumers
D. Every available retailer

6 Selective distribution means using:

Channel management strategies Easy
A. One seller worldwide
B. A few chosen intermediaries
C. Only company-owned stores
D. Every possible sales outlet

7 What is a common purpose of motivating channel members?

Channel management strategies Easy
A. To encourage better performance
B. To increase channel conflict
C. To reduce product quality
D. To eliminate customer service

8 Distribution logistics mainly concerns the movement of products from:

Distribution logistics concept Easy
A. Advertisers to media firms
B. Consumers to competitors
C. Retailers to suppliers only
D. Producers to final markets

9 Which activity is part of distribution logistics?

Distribution logistics concept Easy
A. Brand naming
B. Advertisement writing
C. Market surveying
D. Product transportation

10 What is warehousing?

Distribution logistics concept Easy
A. Negotiating advertising rates
B. Designing products for export
C. Promoting products online
D. Storing products until needed

11 Effective distribution logistics helps a company provide products at the:

Importance of distribution logistics Easy
A. Highest possible price
B. Right time and place
C. Smallest possible size
D. Lowest advertising level

12 Efficient logistics can help reduce:

Importance of distribution logistics Easy
A. Customer satisfaction
B. Distribution costs
C. Product availability
D. Market information

13 Reliable product delivery is most likely to improve:

Importance of distribution logistics Easy
A. Delivery delays
B. Channel confusion
C. Product defects
D. Customer satisfaction

14 Which logistics decision concerns choosing how products will be moved?

Major logistics decisions Easy
A. Packaging color decision
B. Brand extension decision
C. Advertising message decision
D. Transportation decision

15 Inventory management focuses on deciding how much product to:

Major logistics decisions Easy
A. Redesign
B. Advertise
C. Trademark
D. Store

16 Order processing includes receiving and:

Major logistics decisions Easy
A. Changing the company logo
B. Developing product colors
C. Fulfilling customer orders
D. Selecting advertising slogans

17 Vertical marketing systems coordinate members at different levels of a:

Channel integration and systems Easy
A. Promotion campaign
B. Customer survey
C. Distribution channel
D. Production formula

18 In a corporate vertical marketing system, channel activities are controlled by:

Channel integration and systems Easy
A. A public advertising agency
B. One ownership structure
C. An unrelated competitor
D. Random individual buyers

19 Charging different intermediaries unfair prices without a valid reason may be considered:

Ethical issues in distribution decisions Easy
A. Inventory control
B. Price discrimination
C. Market research
D. Ethical sourcing

20 Which practice is an ethical concern in distribution?

Ethical issues in distribution decisions Easy
A. Delivering orders on schedule
B. Providing accurate product information
C. Forcing unfair channel restrictions
D. Maintaining product quality

21 A premium watch manufacturer wants tight control over brand presentation and customer service. Which channel arrangement is most appropriate?

Decisions involved in setting up the channel Medium
A. Selling directly through company-owned stores
B. Using numerous independent convenience stores
C. Appointing several wholesalers in each region
D. Distributing through all retailers willing to stock the product

22 A producer must choose between two channels. Channel X generates annual sales of $500,000 with total channel costs of $350,000. Channel Y generates annual sales of $450,000 with total channel costs of $270,000. Based only on expected annual profit, which channel should be selected?

Decisions involved in setting up the channel Medium
A. Channel X, because its sales are higher
B. Channel Y, because its costs are lower by $80,000 even though profitability should not be considered
C. Channel X, because its profit is $150,000
D. Channel Y, because its profit is $180,000

23 A new snack brand seeks rapid national availability and is willing to give up some control over retail presentation. Which distribution intensity best supports this objective?

Decisions involved in setting up the channel Medium
A. Intensive distribution
B. Exclusive distribution
C. Selective distribution
D. Direct distribution

24 A manufacturer offers retailers higher margins, display allowances, and sales contests to encourage them to promote its products. Which strategy is being used?

Channel management strategies Medium
A. Pull strategy
B. Product development strategy
C. Market skimming strategy
D. Push strategy

25 Retailers complain that a supplier's delivery delays make advertised products unavailable. What is the most appropriate first channel-management response?

Channel management strategies Medium
A. Reduce communication with channel members
B. Review delivery performance with the retailers
C. Immediately terminate every retailer agreement
D. Increase consumer advertising without investigating whether logistics performance is causing the stockouts

26 A manufacturer evaluates distributors using sales growth, inventory levels, customer complaints, and delivery reliability. What channel-management activity does this represent?

Channel management strategies Medium
A. Evaluating channel members
B. Designing product packaging
C. Selecting channel objectives
D. Forecasting industry demand

27 An online retailer coordinates order processing, warehousing, inventory, and transportation to deliver products at the required service level. This coordination best illustrates:

Distribution logistics concept Medium
A. Market segmentation
B. Distribution logistics
C. Product positioning
D. Promotional budgeting

28 A logistics manager accepts slightly higher transportation costs because faster delivery substantially reduces lost sales and inventory holding costs. Which principle supports this decision?

Distribution logistics concept Medium
A. Total logistics cost approach
B. Single-function cost minimization approach
C. Fixed markup pricing approach
D. A policy of minimizing transportation expense regardless of its effects on inventory, service, and sales

29 Which flow is included in modern distribution logistics in addition to the physical movement of goods?

Distribution logistics concept Medium
A. Order and inventory information
B. Competitors' internal accounting records
C. Advertising agency recruitment plans
D. Employee promotion applications

30 A firm has a highly rated product, but customers frequently switch brands because it is often unavailable in stores. Which benefit of effective logistics is the firm failing to achieve?

Importance of distribution logistics Medium
A. Brand repositioning
B. Market diversification
C. Advertising creativity
D. Product availability

31 A company improves order accuracy from 92% to 99% while maintaining delivery speed. What is the most likely marketing result?

Importance of distribution logistics Medium
A. Lower product quality
B. Greater dependence on inaccurate demand forecasts and manual inventory records
C. Higher customer satisfaction
D. Narrower market segmentation

32 Two competitors sell similar products at similar prices. One consistently delivers within 24 hours, while the other takes five days. The first firm's logistics capability primarily creates:

Importance of distribution logistics Medium
A. A regulatory entry barrier
B. A reduction in customer expectations
C. A product-line contraction
D. A service-based competitive advantage

33 A distributor faces unpredictable demand and wants to reduce stockouts without changing its replenishment lead time. Which inventory decision is most appropriate?

Major logistics decisions Medium
A. Increase safety stock
B. Eliminate cycle stock
C. Use slower transportation for every order
D. Close regional warehouses

34 A company ships lightweight, high-value medical devices that customers need urgently. Which transportation mode is generally most suitable?

Major logistics decisions Medium
A. Air transport
B. Rail transport
C. Water transport
D. Pipeline transport

35 A retailer places warehouses closer to major customer clusters. Which outcome is most likely?

Major logistics decisions Medium
A. Slower delivery with lower order accuracy
B. Lower facility costs with longer delivery distances
C. Faster delivery with potentially higher facility costs
D. Elimination of inventory costs because products are stored closer to customers

36 A wholesaler installs an automated system that immediately checks inventory, verifies customer credit, and sends picking instructions after an order is received. Which major logistics decision is primarily improved?

Major logistics decisions Medium
A. Channel ownership
B. Product branding
C. Order processing
D. Facility location

37 A manufacturer owns its wholesalers and retail outlets, coordinating all stages under common ownership. Which system does this represent?

Channel integration and systems Medium
A. Administered vertical marketing system
B. Conventional independent channel system
C. Contractual vertical marketing system
D. Corporate vertical marketing system

38 Several independent retailers join together to purchase inventory in bulk and operate a shared distribution center. This is an example of:

Channel integration and systems Medium
A. Backward vertical integration
B. A conventional channel in which each retailer avoids coordination and independently duplicates all distribution activities
C. Forward vertical integration
D. Horizontal channel integration

39 A powerful supplier threatens to stop deliveries unless a small retailer agrees not to stock competing brands, despite having no legitimate efficiency reason. What ethical concern is most evident?

Ethical issues in distribution decisions Medium
A. Efficient inventory control
B. Abuse of channel power
C. Constructive channel cooperation
D. Fair territory allocation

40 A distributor knowingly sells expired products after replacing their date labels. Which ethical principle is most directly violated?

Ethical issues in distribution decisions Medium
A. Territorial sales specialization
B. Selective distribution efficiency
C. Warehouse space utilization
D. Honesty and consumer safety

41 A manufacturer finds that target customers require small purchase quantities, immediate availability, broad assortment, and extensive presale advice. Which channel design best reconciles these service-output requirements?

Decisions involved in setting up the channel Hard
A. A direct website supported by one national fulfillment center
B. Exclusive regional agents offering only the manufacturer's products
C. Selective specialist dealers carrying complementary product categories
D. Intensive convenience outlets providing limited technical assistance

42 A direct channel has annual fixed costs of $480,000 and variable costs of $7 per unit. A distributor channel has annual fixed costs of $40,000 and variable costs of $15 per unit. Above what annual volume does the direct channel become less costly?

Decisions involved in setting up the channel Hard
A. 45,000 units
B. 50,000 units
C. 60,000 units
D. 55,000 units

43 A technology producer expects demand to be highly uncertain and its product specifications to change within 18 months. Which channel-design criterion should receive the greatest weight when evaluating otherwise comparable alternatives?

Decisions involved in setting up the channel Hard
A. Coverage of existing territories
B. Economies from bulk purchasing
C. Control over reseller pricing
D. Adaptability of channel commitments

44 A manufacturer pays dealers for demonstration units, but customers report that dealers keep the units in storage while claiming the allowance. Which response best combines channel motivation with behavioral control?

Channel management strategies Hard
A. Threaten immediate termination whenever monthly sales decline
B. Link reimbursement to verified demonstrations and conversion metrics
C. Increase the allowance and rely on dealer self-reporting
D. Replace the allowance with a uniform wholesale discount

45 A producer opens an online store at prices below those charged by its authorized dealers. Dealers retaliate by promoting rival brands. Which intervention most directly addresses the underlying channel conflict?

Channel management strategies Hard
A. Expand online advertising without changing channel policies
B. Increase dealer inventory targets for the producer's brand
C. Create channel-consistent pricing and dealer attribution rules
D. Reduce product training offered to authorized dealers

46 A distributor exceeds its sales quota by discounting heavily, but generates frequent returns, late payments, and poor installation outcomes. Which evaluation system is most appropriate?

Channel management strategies Hard
A. Assess sales, margin, service, returns, and payment quality
B. Measure annual order volume without adjusting for returns
C. Rank the distributor solely by gross sales revenue
D. Evaluate only whether territorial coverage has increased

47 A logistics manager can reduce transport cost by $180,000 through slower consolidated shipments. The change would increase inventory carrying cost by $70,000, expected stockout cost by $85,000, and order-processing cost by $10,000. Under a total-cost logistics approach, what should the firm do?

Distribution logistics concept Hard
A. Adopt the change because total cost falls by $15,000
B. Reject the change because total cost rises by $15,000
C. Reject the change because inventory-related costs rise by $155,000
D. Adopt the change because transport cost falls by $180,000

48 A firm minimizes each logistics function's budget independently. Purchasing buys in large batches, warehousing reduces space, and transportation waits for full loads. Service deteriorates despite lower departmental costs. Which concept was violated?

Distribution logistics concept Hard
A. Functional specialization within logistics
B. Selective distribution through intermediaries
C. Administrative vertical channel coordination
D. Integrated total-system cost optimization

49 A service reduction saves $300,000 in annual logistics cost but is expected to reduce sales by $2 million. The contribution margin ratio is 35%, and no other costs change. What is the expected annual effect on profit?

Importance of distribution logistics Hard
A. A $300,000 decrease
B. A $400,000 increase
C. A $400,000 decrease
D. A $700,000 increase

50 Two suppliers offer identical products and prices. Supplier X delivers in two days with 98% order completeness; Supplier Y delivers in one day with 82% completeness. A buyer's production stops if any required line item is missing. Which metric should dominate the buyer's evaluation?

Importance of distribution logistics Hard
A. Transportation cost per package
B. Average warehouse utilization
C. Perfect-order fulfillment rate
D. Average shipment transit time

51 Daily demand averages 120 units, and replenishment lead time is five days. The standard deviation of demand during lead time is 40 units. If the desired cycle-service level has , what reorder point should be used?

Major logistics decisions Hard
A. 798 units
B. 600 units
C. 666 units
D. 698 units

52 A company operates nine identical warehouses with total safety stock of 9,000 units. Assuming the square-root law applies and demand characteristics remain stable, approximately how much safety stock is required after consolidation to four warehouses?

Major logistics decisions Hard
A. 7,500 units
B. 8,000 units
C. 6,000 units
D. 4,000 units

53 Air freight for 10,000 units costs $9 per unit and takes two days. Sea freight costs $2 per unit and takes 20 days. The shipment's product value is $800,000, and annual inventory carrying cost is 24%. Ignoring all other differences, which option has the lower transport-plus-pipeline-inventory cost?

Major logistics decisions Hard
A. Sea, by approximately $79,500
B. Sea, by approximately $60,500
C. Air, by approximately $79,500
D. Air, by approximately $60,500

54 A firm sells a common product platform in four markets, but each market requires different packaging and labels. Forecast error is high at the market level but moderate in aggregate. Which logistics design most effectively reduces mismatch inventory?

Major logistics decisions Hard
A. Increase each market's safety stock using local forecasts
B. Package all units by market before demand becomes observable
C. Allocate equal finished-goods quantities to every market
D. Delay market-specific packaging until orders become visible

55 An independent wholesaler organizes a voluntary network of retailers, develops common purchasing and merchandising programs, and enables the group to compete with corporate chains. What type of channel system is this?

Channel integration and systems Hard
A. An administered vertical system
B. A retailer-sponsored cooperative
C. A wholesaler-sponsored voluntary chain
D. A corporate vertical system

56 A dominant manufacturer coordinates independent retailers through its market power, even though no ownership or franchise contract gives it formal authority. Which system best describes the arrangement?

Channel integration and systems Hard
A. Corporate vertical marketing system
B. Administered vertical marketing system
C. Contractual vertical marketing system
D. Horizontal cooperative marketing system

57 A retailer lets customers order through an app, return products in stores, and view the same real-time inventory across both channels. Store managers resist because online-attributed returns reduce their performance scores. What integration change is most important?

Channel integration and systems Hard
A. Separate online inventory from store inventory
B. Restrict app purchases to home delivery only
C. Align attribution and incentives across customer journeys
D. Evaluate stores exclusively on in-store revenue

58 A powerful retailer requires suppliers to pay an undisclosed fee for favorable shelf placement while presenting product rankings to consumers as independent recommendations. What is the primary ethical problem?

Ethical issues in distribution decisions Hard
A. The retailer earns different margins across product categories
B. The suppliers receive access to high-traffic shelf space
C. The retailer uses selective rather than intensive distribution
D. The retailer conceals a material commercial influence

59 A manufacturer terminates a long-standing distributor immediately after the distributor reports that sales targets were achieved through falsified customer records. The contract permits termination, but comparable violations by larger distributors were ignored. Which concern is most directly raised?

Ethical issues in distribution decisions Hard
A. Excessive geographic coverage and market saturation
B. Inconsistent enforcement and retaliatory channel power
C. Unavoidable conflict in a multichannel structure
D. Insufficient inventory pooling across distributors

60 A platform uses neighborhood-level data to exclude low-income districts from same-day delivery, although serving those districts has comparable cost, capacity, and security conditions. Which ethical issue is most salient?

Ethical issues in distribution decisions Hard
A. Unfair discriminatory access to distribution service
B. Inadequate differentiation of delivery speeds
C. Inefficient duplication of warehouse facilities
D. Excessive reliance on direct channel ownership