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Summer 2013
Master of Business Administration- MBA Semester 3
ML0011 - Buying and Merchandising
Q1. Explain the various principles of an ideal merchandising giving suitable examples for each?
(Meaning of Ideal Merchandising – 2, Detail explanation of 14 principles - 8 marks) 10 Marks
Answer : Ideal Merchandising :
Merchandising is a term used in marketing to denote all those sales- promotion activities that aim to generate the
customer’s interest in the product or service other than conventional press and television advertising, direct mail or
the use of PR. The purpose of merchandising is to bring product and customer into the closest possible proximity in
order that the attributes of the merchandise may become fully apparent and, in effect, sell themselves.
Q2. Enumerate the category management strategies that are used by retailers to ensure a smooth category
management process.
(Meaning of category management – 2 marks, Detail explanation of 7 steps – 8 marks) 10 Marks
Answer : Category management :
Category management is a retailing and supply management concept in which the range of products purchased by
a business organization or sold by a retailer is broken down into discrete groups of similar or related products;
these groups are known as product categories (examples of grocery categories might be: tinned fish, washing
detergent, toothpastes).
Q3. Discuss the concept of open-to-buy system. How do you calculate open- to-buy for the past and current
period?
(Detail explanation on the concept of OTB system - 3 marks, Calculation of OTB for past period – 2 marks,
Calculation of OTB for current period - 5 marks) 10 Marks
Answer : Open to buy system :
An open-to-buy is a tool that in the hands of a fully committed small retailer can profoundly improve financial
performance. It allows a retailer to manage inventory, plan purchases, and budget effectively. The clearest and
simplest definition is that it is a financial budget for retail merchandise. Let's look at this more closely.

2. Q4. Enumerate some merits and demerits of Formal Buying Organization, Informal Buying Organization,
Centralized Buying & Decentralized Buying along with diagrammatic representation of functions and attributes
of the buying department.
(Diagrammatic representation of functions and Attributes of the buying department – 2 marks, Merits and
Demerits of formal buying – 2 marks, Merits and Demerits of informal buying – 2 marks, Merits and Demerits of
Centralized buying – 2 marks, Merits and Demerits of Decentralized buying – 2 marks) 10 Marks
Answer : Diagrammatic representation of functions and Attributes of the buying department:
Purchasing is a key activity in the supply chain. It can significantly influence the overall success of an emergency
response depending on how it is managed. In humanitarian supply chains, procurement represents a very large
proportion of the total spend and should be managed effectively to achieve optimum value. Procurement works
like a pivot in the internal supply chain process turning around requests into actual products/commodities or
services to fulfill the needs
Q5. Enumerate the first 5 steps in Merchandise Buying and Handling Process.
(Explanation of first 5 steps – 8 marks, Diagram - 2 marks) 10 Marks
Answer : First 5 steps in Merchandise Buying and Handling process :
Once a retailer develops a strategy for handling merchandise, a reorder procedure must be developed. This
procedure depends on various factors like the time taken by the retailer to process the order, the time taken by the
vendor to fulfill the order, the inventory turnover rate, the financial expenditure and the cost of holding inventory
versus the cost of ordering merchandise. The retailer should re-evaluate the complete merchandising process
periodically.
Q6. ‘Selecting an appropriate vendor is the key step in the success of an enterprise’.
(Detail explanation of five steps - 9 marks, Diagram – 1 mark) 10 Marks
Answer: Steps in selection of an appropriate vendor :
1. Analyze the Business Requirements:
Before you begin to gather data or perform interviews, assemble a team of people who have a vested interest in
this particular vendor selection process. The first task that the vendor selection team needs accomplish is to define,
in writing, the product, material or service that you are searching for a vendor. Next define the technical and
business requirements
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id
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or
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