Examples of perishable goods in the following topics:
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- Seasonal trends and internal projections of consumption in certain goods can have a significant impact on opportunity cost and potential profit for an organization.
- An important aspect of seasonal inventory management is the concept of perishable goods.
- This is called a perishable good.
- Perishable goods have an even greater opportunity cost when it comes to mismanaging (and erroneously predicting) demand.
- If too much of a perishable good is ordered, not only will it cost the organization in unnecessary inventory fees, but also adds the risk of never been sold at all (a complete sunk cost at that point).
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- The monetary economy is a significant improvement over the barter system, in which goods were exchanged directly for other goods.
- Barter is a system of exchange in which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money .
- Absence of common measure of value: In a monetary economy, money plays the role of a measure of value of all goods, making it possible to measure the values of goods against each other.
- Indivisibility of certain goods: If a person wants to buy a certain amount of another's goods, but only has payment of one indivisible good which is worth more than what the person wants to obtain, a barter transaction cannot occur.
- Difficulty storing wealth: If society relies exclusively on perishable goods, storing wealth for the future may be impractical.
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- Without money, the buyers would exchange goods with the sellers by exchanging one good for another good, which we call barter.
- Problem 2: Many goods, like fruits and vegetables, deteriorate and rot over time.
- Growers of perishable goods could not store their purchasing power.
- They would need to exchange their products for goods that would not perish quickly if they want to save.
- A price ratio shows the amount of one good that buyers and sellers exchange for another good, and we show examples of price ratios in Figure 2.
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- Inventory turnover must be rapid, as the goods being sold are perishable.
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- Surpluses, or excess supply, indicate that the quantity of a good or service exceeds the demand for that particular good at the price in which the producers would wish to sell (equilibrium level).
- In both scenarios businesses will be forced to minimize margins or incorporate losses on that particular good.
- In a perfectly competitive market, particularly pertaining to goods that are not perishable, excess supply is equivalent to the quantity available in the market beyond the equilibrium point of intersection between supply and demand.
- It could also indicate that the desired good has a low level of affordability by the general public, and can be a dangerous societal risk for necessary commodities.
- A price floor ensures a minimum price is charged for a specific good, often higher than that what the previous market equilibrium determined.
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- Yield management is the process of understanding, anticipating, and influencing consumer behavior to maximize yield or profits from a fixed, perishable resource, such as hotel room reservations and airline seats .
- Enterprises that use yield management periodically review transactions for goods or services already supplied and for goods or services to be supplied in the future.
- By goods (such as a seat on a flight or a seat at an opera production)
- By group of goods (such as the entire opera house or all the seats on a flight)
- Yield management is particularly suitable when selling perishable products, which are goods that become unsellable at a point in time (for example, airline tickets just after a flight takes off).
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- Perishability of services implies that service capacity cannot be stored, saved, returned, or resold once rendered to a customer.
- Services are perishable in two regards.
- Perishability can affect company performance as balancing supply and demand is very difficult.
- It is a perishable entity.
- Describe why business services are perishable and how perishability impacts services marketing
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- Services represent an integral part of many products and the correlation of goods and services is represented on a goods-services continuum.
- No longer are goods considered separate from services.
- It is this interconnectedness between goods and services that is represented on a goods-services continuum.
- If totally intangible, they are exchanged directly from the producer to the user, cannot be transported or stored, and are almost instantly perishable.
- A taxi cab driver provides both a good and a service, so he is providing a product.
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- For example, if a given project involves perishables (such as food), there is a definite time limit on product value–once perishables spoil, their product value is zero.
- Careful chronological and quantity-based inventory questions must be answered to create a process flow that ensures the value of the goods being sold.
- Uncertainty - Inventories are maintained as buffers to meet uncertainties in demand, supply, and movements of goods.
- Economies of scale - The ideal condition of "one unit at a time at a place where a user needs it, when he needs it" tends to incur a lot of logistical costs that result in bulk buying, transporting, and storing the goods.
- When you purchase an item at a store, the bar code is scanned so that the manufacturer's inventory system can remove that item from their list of inventoried goods (transferring it to the income statement as revenue).
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- Thus, some assets are good as money.
- Inflation is continual increases in the average prices; GDP measures the total amount of production of all goods and services within the economy.
- Barter is inefficient because it does not allow people to specialize in the production of goods and services.
- People would have considerable search costs to find each other, and people could not store perishable products.
- Each function of money overcomes a problem with barter and allows people to specialize in the production of goods and services.