Chapter 24, Problem 1BCQ

To determine

The way through which Bar-code technology alters the retail production function as it stimulates a lot of investment in retailing and without use of new technology, the accomplishment of same amount of investment.

Introduction: A Bar-code scanner or reader is an electronic device that record and translate barcodes from the recognized image into alphanumeric digits. These are used most popularly in retail shops, various industries such as manufacturing, medicines, transportation, travel etc. There are various types of barcode scanners like pen-type scanners, laser scanners, LED scanners, camera-based scanners, smart phones etc.

Explanation of Solution

Bar-code scanners have changed the retail production function. Since 1974, these codes and their two-dimensional visual patterns are easily recognizable by scanners and smart phones.

The usage of these barcode readers in retail production and in various industries have increased tremendously. Retailers use them to track sales, reorder merchandise, and restock shelves and also to check out productivity of individual workers.

The benefits of this innovation in retail production are enormous and thus, adoption of this technology has reduced labor costs by as much as 40% due to the replacement of labor-intensive technology to the capital and machine base. Hence, bar-code technology made retail industry computerized.

However, retailers and firms had to spend a lot of investment to buy the scanners and the information processing systems. Also, manufacturers had to spend amount of investment in order to install the equipment to put bar codes on their products but installation of equipment created a chicken-and-egg problem that is retailers wait for more scanner-readable products and manufacturers wait for more scanner- ready stores.

Over a period of time, this chicken-and–egg problem was solved by the retailers and manufacturers as they made investments to buy barcode technology and the information processing systems.