FlyerTalk Forums - View Single Post - The Logic of this ? Please explain.
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Old Apr 30, 2003 | 8:34 pm
  #6  
msn
 
Join Date: Jul 2001
Location: Europe
Posts: 2,014
<Puts on highly paid consultant to industry hat>

Ever hear of dumpster diving? University students will go to the back door of a donut shop just after closing and extract the big - and perfectly clean - garbage bag full of what had not sold throughout the day - and eat for a few days on the takings.

Some bakeries put their remaining merchandise on sale for half off thirty minutes to closing - and people line up waiting for the price to drop. You need two people to buy what a minute before one would buy, to get the same revenue, excpet now your costs are higher - double the customer contact, twice the bags, twice as many chances to make a mistake at the cash register.

Some very well known chains look at the two options and decide that for price integrity and operational reasons, that they will do the first - dump the product, rather than sell it for less, or even give it away. Really clever companies learn to adjust production and distribution accordingly, and really dumb ones donate the unsold product. Why dumb? Because they found a place to put the unsold product, and the recipient will start to count on the "regular supply" such that neither side has an incentive to improve the balcance between what is offered and what is sold.

<Takes hat off and goes to bed. Bah! Airlines!>
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