Ethical dilemma 392 | Operations Management homework help

Ethical Dilemma

Although buried by mass customization and a proliferation of new products of numerous sizes and variations, grocery chains continue to seek to maximize payoff from their layout. Their layout includes a marketable commodity—shelf space—and they charge for it. This charge is known as a slotting fee . Recent estimates are that food manufacturers now spend some 13% of sales on trade promotions, which is paid to grocers to get them to promote and discount the manufacturer’s products. A portion of these fees is for slotting, but slotting fees drive up the manufacturer’s cost. They also put the small company with a new product at a disadvantage because small companies with limited resources may be squeezed out of the marketplace. Slotting fees may also mean that customers may no longer be able to fi nd the special local brand. 

How ethical are slotting fees?

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