Beauty Business FREE Beauty Business Inventory and Retail Strategy Questions and Answers 2 — Questions and Answers
Question 1: A beauty supply store notices that a particular hair serum consistently sells out within days of restocking. Which inventory strategy should the owner implement?
- Increase the reorder point and safety stock level for that item (Correct answer)
- Discontinue the product to avoid stockout complaints
- Keep the same reorder schedule but raise the price
- Order the same quantity but switch to a different supplier
Correct answer: Increase the reorder point and safety stock level for that item
Increasing the reorder point and safety stock ensures the high-demand item is replenished before it sells out.
Question 2: What is the primary purpose of conducting an ABC analysis in a beauty retail inventory?
- To categorize products by sales value so high-revenue items receive the most attention (Correct answer)
- To alphabetically organize products on shelves for easier customer browsing
- To determine which products should be advertised on social media
- To calculate the exact profit margin of each individual SKU
Correct answer: To categorize products by sales value so high-revenue items receive the most attention
ABC analysis ranks inventory items by revenue contribution so managers can prioritize control of the most valuable products.
Question 3: A salon owner wants to reduce dead stock of seasonal beauty products. Which approach is most effective?
- Use historical sales data to forecast seasonal demand and adjust purchase quantities accordingly (Correct answer)
- Purchase extra seasonal inventory to guarantee availability throughout the year
- Store seasonal items indefinitely until they eventually sell
- Offer seasonal products only through online channels to reduce shelf space costs
Correct answer: Use historical sales data to forecast seasonal demand and adjust purchase quantities accordingly
Analyzing past seasonal sales patterns allows the owner to order appropriate quantities and minimize unsold surplus.
Question 4: Which retail pricing strategy involves setting beauty products at a high initial price and gradually lowering it over time?
- Price skimming (Correct answer)
- Penetration pricing
- Loss leader pricing
- Everyday low pricing
Correct answer: Price skimming
Price skimming starts with a premium price to capture early adopters and then reduces the price to attract broader market segments.
Question 5: What key metric should a beauty business owner track to determine how efficiently inventory is being sold and replaced?
- Inventory turnover ratio (Correct answer)
- Customer acquisition cost
- Net promoter score
- Website bounce rate
Correct answer: Inventory turnover ratio
The inventory turnover ratio measures how many times inventory is sold and replaced over a period, indicating sales efficiency.
Question 6: A beauty retailer is implementing a just-in-time inventory system. What is the biggest risk associated with this approach?
- Supply chain disruptions can cause immediate stockouts since minimal backup inventory is kept (Correct answer)
- Excess warehouse space will go unused and increase overhead costs
- Customers may perceive the business as having too many product options
- The retailer will need to hire additional staff to manage larger shipments
Correct answer: Supply chain disruptions can cause immediate stockouts since minimal backup inventory is kept
Just-in-time systems keep minimal inventory on hand, making the business vulnerable to any disruption in the supply chain.
Beauty Business FREE Beauty Business Inventory and Retail Strategy Questions and Answers 2
A beauty supply store notices that a particular hair serum consistently sells out within days of restocking.
Which inventory strategy should the owner implement?