Question 29 2 pts Dairy items, fresh fruit and newspapers are inventory items that: O require that prices be lowered every two days O are subject to deterioration and spoilage O do not require safety stocks O have minimal holding costs O cannot be ordered in large quantities alculator Exam Guideline con charina Hide
The correct answer and explanation is:
Answer: They are subject to deterioration and spoilage.
Explanation:
Dairy items, fresh fruit, and newspapers are classic examples of perishable inventory. These items have a limited shelf life because their quality diminishes rapidly over time due to natural processes. Dairy products, for instance, are highly sensitive to temperature fluctuations and require proper refrigeration to slow down bacterial growth. Similarly, fresh fruit, while nutritious, begins to lose its freshness soon after harvest; exposure to air, moisture, and varying temperatures accelerates the ripening process, which can lead to spoilage if not sold quickly.
Newspapers, although not food items, also have a very short useful life. Their relevance is tied directly to the day’s news; once outdated, they lose their value almost immediately, much like other perishable goods. The rapid decline in quality or utility of these products means that businesses must implement tight inventory control measures. Stock levels are carefully monitored, and orders are placed frequently in smaller quantities to reduce the risk of having unsold or spoiled goods.
The perishable nature of these items means that traditional inventory strategies—such as maintaining large safety stocks or ordering in bulk—are not practical. Instead, retailers often adopt just-in-time ordering systems and dynamic pricing strategies to move inventory quickly, reducing holding costs and minimizing losses due to spoilage. While one might think that frequent price reductions could be necessary, lowering prices every two days is not a general rule for all such items. The key issue remains that the quality and value of these goods diminish rapidly, necessitating swift turnover and careful management.
This intrinsic risk of deterioration and spoilage distinguishes perishable inventory from more durable goods and drives the specialized handling and logistics strategies essential to manage these items effectively.