FREE Beauty Business Inventory and Retail Strategy Questions and Answers Flashcards

A beauty supply store notices that a particular hair serum consistently sells out within days of restocking. Which inventory strategy should the owner implement?

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.

What is the primary purpose of conducting an ABC analysis in a beauty retail inventory?

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.

A salon owner wants to reduce dead stock of seasonal beauty products. Which approach is most effective?

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.

Which retail pricing strategy involves setting beauty products at a high initial price and gradually lowering it over time?

Answer: Price skimming

Price skimming starts with a premium price to capture early adopters and then reduces the price to attract broader market segments.

What key metric should a beauty business owner track to determine how efficiently inventory is being sold and replaced?

Answer: Inventory turnover ratio

The inventory turnover ratio measures how many times inventory is sold and replaced over a period, indicating sales efficiency.

A beauty retailer is implementing a just-in-time inventory system. What is the biggest risk associated with this approach?

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.