CRT CRT Retail Operations & Inventory Management 1 — Questions and Answers
Question 1: What does FIFO stand for in retail inventory management?
- First In, First Out (Correct answer)
- First Invoice, Final Order
- Freight In, Freight Out
- Full Inventory, Final Output
Correct answer: First In, First Out
FIFO (First In, First Out) means selling older stock before newer stock to maintain product freshness and prevent spoilage or aging issues.
Question 2: When conducting a physical inventory count, what is the primary reason for comparing physical counts to system records?
- To identify shrinkage, theft, and data entry errors (Correct answer)
- To calculate sales tax owed for the period
- To determine employee performance bonuses
- To automatically set new retail prices
Correct answer: To identify shrinkage, theft, and data entry errors
Comparing physical counts to system records identifies discrepancies caused by theft, spoilage, miscounts, or data entry errors — all forms of shrinkage that reduce profitability.
Question 3: What is a planogram in retail operations?
- A visual diagram showing where products should be placed on shelves (Correct answer)
- A customer loyalty program design document
- A financial planning spreadsheet template
- An employee shift scheduling system
Correct answer: A visual diagram showing where products should be placed on shelves
A planogram is a visual merchandising tool that specifies exactly where each product should be placed on shelves to maximize sales and create an organized shopping experience.
Question 4: What is the purpose of a reorder point (minimum stock level) in inventory management?
- To trigger a purchase order before stock runs out (Correct answer)
- To set the maximum allowable retail selling price
- To calculate employee sales commissions
- To determine the store's optimal operating hours
Correct answer: To trigger a purchase order before stock runs out
A reorder point is the minimum stock level that triggers a new order, ensuring product availability without running out during supplier lead time.
Question 5: In tobacco retail, what is the term for premium cigars sold individually rather than in full boxes?
- Singles (Correct answer)
- Splits
- Detached
- Loose units
Correct answer: Singles
Singles are individually sold cigars that allow customers to sample different brands without purchasing a full box, typically offering higher per-unit profit margins for the retailer.
Question 6: What is the gross margin formula used in retail pricing?
- (Selling Price − Cost of Goods) ÷ Selling Price × 100 (Correct answer)
- (Cost of Goods − Selling Price) ÷ Cost × 100
- Selling Price × Cost of Goods × 100
- Selling Price ÷ Cost of Goods − 100
Correct answer: (Selling Price − Cost of Goods) ÷ Selling Price × 100
Gross margin percentage is calculated as (Selling Price minus Cost of Goods Sold) divided by Selling Price, multiplied by 100 — always based on selling price, not cost.
CRT CRT Retail Operations & Inventory Management 1
What does FIFO stand for in retail inventory management?