DEFINITION of 'Barcode'

A graphical representation of a product's identifying information formed by a two-dimensional pattern of black and white shapes. Barcodes are able to be read by optical devices, such as a barcode reader or scanner, and are most commonly composed of parallel black and white lines. Barcodes are used to automate the transfer of product information, such as price, from the product to an electronic system, such as a cash register.

BREAKING DOWN 'Barcode'

Barcodes can allow stores to track inventory easily if linked to a database, which in turn helps companies track trends in consumer habits, order more inventory and adjust prices. If managed properly, they can help reduce the cash conversion cycle by lowering inventory and thus lowering the days inventory. They are on almost any product you can buy at the store. The most commonly used form of barcode is the Universal Product Code, first introduced in the 1970s for use in grocery stores. They allow stores to track inventory easily if linked to a database, which in turn helps companies track trends in consumer habits, order more inventory and adjust prices.

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