The Online Photo-Sharing Web Site Shutterfly Offers Unlimitedfree Uploads

question 30

Multiple Choice

The online photo-sharing Web site Shutterfly offers unlimitedfree uploads. Which of the following best explains why theyoffer this service at no charge?

• A)Shutterfly is trying to increase switching costs for their consumers.
• B)Shutterfly is trying to decrease their average costs.
• C)Shutterfly is trying to increase competition.
• D)The marginal cost of uploading photos is near zero; setting price equal to marginal cost is simply an efficient pricing
• Strategy.

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Definitions:

Safety Inventory

The reserve stock maintained to prevent stockouts, ensuring smooth operations despite demand and supply fluctuations.

Pipeline Inventory

Goods in transit or in the process of distribution, considered as a part of a company's inventory.

Product Substitution

The practice of replacing one product with another, often due to stockouts, customer preferences, or cost considerations, to maintain service levels and customer satisfaction.

Different Product

A good or service that is distinct from others in its category, often possessing unique characteristics or features.