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Please provide some feedback, taking GMAT in July

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Please provide some feedback, taking GMAT in July

Post Sat Jun 25, 2016 11:34 am
Elapsed Time: 00:00
  • Lap #[LAPCOUNT] ([LAPTIME])
    The following appeared as part of an annual report sent to stockholders by Olympic Foods, a processor of frozen
    foods:
    “Over time, the costs of processing go down because as organizations learn how to do things better, they become
    more efficient. In color film processing, for example, the cost of a 3-by-5-inch print fell from 50 cents for five-day
    service in 1970 to 20 cents for one-day service in 1984. The same principle applies to the processing of food. And
    since Olympic Foods will soon celebrate its 25th birthday, we can expect that our long experience will enable us to
    minimize costs and thus maximize profits.”
    Discuss how well reasoned . . . etc.


    The argument given contends that as an organization gets older, it learns how to do things better which in turn increases its efficiency and therefore the cost of processing for Olympic Foods will decrease and profits will increase. On the first look, it might look like a good argument, but on a closer look, the argument does not hold because of its poor reasoning, unproven assumptions and unsubstantiated claims.
    The author also fails to include many concerns which are critical for evaluating the position that he takes.

    First, the author cites the example of the film processing industry to show how it the cost comes down as an industry gains years. The data given does not support author's hypothesis as for an equal length of service of five days, the cost actually increased by 50 cents. In addition, there are many industries where although the cost of one product might come down over time, but so does the demand for it. This does little to lower the processing cost as the industry caters to the product that are in demand.

    Also, the author fails to consider the impact of other factors that are important to increase profitability like cost of material and labor which have nothing to do with how much experience an organization gains. In fact, other factors like efficiency of machines generally decreases over time hence impacting profitability in an adverse way.

    Lastly, the author fails to shed light on what exactly does the organization learns as it gains experience and how does the knowledge actually improves the costs of processing. Also how much experience, in general, is required before it has the knowledge to improve its efficiency.

    In sum, the argument ,as it stands, is flawed because of its poor reasoning and failure to address many key issues. It would become significantly more convincing if the author includes the above mentioned points in the argument's scope.

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