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Q11-OG13th CR

This topic has 4 expert replies and 5 member replies
rupalikunmun123 Newbie | Next Rank: 10 Posts Default Avatar
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Q11-OG13th CR

Post Fri Aug 17, 2012 11:04 am
The Maxilux car company's design for its new luxury model, the Max 100, included a special design for the tires that was intended to complement the model's image. The winning bid for supplying these tires was submitted by Rubco. Analysts concluded that the bid would only just cover Rubco's costs on the tires, but Rubco executives claim that winning the bid will actually make a profit for the company.

Which of the following, if true, most strongly justifies the claim made by Rubco's executives?

(A) In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.

(B) Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.

(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.

(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.

(E) When Maxilux awarded the tire contract to Rubco, the only criterion on which Rubco's bid was clearly ahead of its competitors' bids was price.


1)Can anyone please explain me why we are eliminating B,C and D options?

Option B)As per my understanding we are eliminating B as it talks about the other models of Maxilux company but our concern is how Rubco makes profit on the winning bid for Max 100 ........Please let me know if my understanding is correct on this answer?

Option C talks about less production cost so it should help Rubco in earning profits. Why are we eliminating this option?

Please explain why D is correct?

2)One more question is that in the passage it is mentioned that the Analyst concluded that the bid would only just cover Rubco's cost on tires.Is this a premise/fact ?Do we have to consider this as a fact? Can we attack what analyst concluded?

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Post Wed Jun 01, 2016 3:00 am
davidfrank wrote:
I thought that we could never dispute conclusion. My question is also around option c. If the two plants are located close to each other, then my cost of production would come down and thus profit increases.
C: The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.
The location of the two facilities is irrelevant, since it is given as a PREMISE that the bid would only just cover Rubco's costs.
A premise is a FACT.
It cannot be disputed.
The correct answer choice cannot dispute this premise by claiming that the bid would MORE THAN COVER Rubco's costs.
Rather, the correct answer choice must show how Rubco will make a profit DESPITE the high cost of producing the tires.

Quote:
Please tell me why is D a stronger answer. On the other hand if I look at D then even though the tires are supplied new every time a part worns out, the cost of the tyres will remain the same irrespective of the number sold. Please clarify
D: When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.
Here, there is a market for the tires BEYOND those supplied to Maxilux in the original bid.
Implication:
Rubco can charge a high price for each replacement tire, enabling the company to make a profit.

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Post Wed Jun 01, 2016 3:05 am
richachampion wrote:
Replacement Tyre is also a tyre with the same manufacturing cost and holds the same relationship -

Profit = Revenue - Cost = 0
The portion in red is not necessarily true.
As noted in my post just above, Rubco can charge a high price for each replacement tire, leading to an INCREASE IN REVENUES and enabling the company to make a profit.

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Post Wed Jun 01, 2016 3:00 am
davidfrank wrote:
I thought that we could never dispute conclusion. My question is also around option c. If the two plants are located close to each other, then my cost of production would come down and thus profit increases.
C: The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.
The location of the two facilities is irrelevant, since it is given as a PREMISE that the bid would only just cover Rubco's costs.
A premise is a FACT.
It cannot be disputed.
The correct answer choice cannot dispute this premise by claiming that the bid would MORE THAN COVER Rubco's costs.
Rather, the correct answer choice must show how Rubco will make a profit DESPITE the high cost of producing the tires.

Quote:
Please tell me why is D a stronger answer. On the other hand if I look at D then even though the tires are supplied new every time a part worns out, the cost of the tyres will remain the same irrespective of the number sold. Please clarify
D: When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.
Here, there is a market for the tires BEYOND those supplied to Maxilux in the original bid.
Implication:
Rubco can charge a high price for each replacement tire, enabling the company to make a profit.

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Post Wed Jun 01, 2016 3:05 am
richachampion wrote:
Replacement Tyre is also a tyre with the same manufacturing cost and holds the same relationship -

Profit = Revenue - Cost = 0
The portion in red is not necessarily true.
As noted in my post just above, Rubco can charge a high price for each replacement tire, leading to an INCREASE IN REVENUES and enabling the company to make a profit.

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Post Wed Jun 14, 2017 10:30 am
rsarashi wrote:
Hi GMATGuruNY ,

This is a inference question and inference question can also be solved by negating method.

Can you please explain this by negation method?

Please explain.

Thanks
This is not an inference CR but a STRENGTHEN CR.
According to the question stem, the correct answer choice must justify the claim that winning the bid will actually make a profit for the company.
In other words, the correct answer choice must STRENGTHEN the conclusion in blue.
The negation test is not applicable to strengthen CRs.

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rsarashi Master | Next Rank: 500 Posts Default Avatar
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Post Wed Jun 14, 2017 10:00 am
Quote:
Premise: The bid to supply tires for the Max 100 will just cover Rubco's costs.
Conclusion: As a result of winning the bid, Rubco will make a profit.
For the conclusion to be valid, what must be true?
As a result of winning the bid, Rubco must be able to make a profit in SOME OTHER WAY.

Answer choice D: When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.
This answer choice shows how Rubco will make a profit: when purchasers of the Max 100 need a new tire, they will buy the specially-designed tire made by Rubco.

The correct answer is D.

Hi GMATGuruNY ,

This is a inference question and inference question can also be solved by negating method.

Can you please explain this by negation method?

Please explain.

Thanks

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richachampion Legendary Member
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Post Tue May 31, 2016 9:43 pm
GMATGuruNY wrote:
rupalikunmun123 wrote:
The Maxilux car company's design for its new luxury model, the Max 100, included a special design for the tires that was intended to complement the model's image. The winning bid for supplying these tires was submitted by Rubco. Analysts concluded that the bid would only just cover Rubco's costs on the tires, but Rubco executives claim that winning the bid will actually make a profit for the company.

Which of the following, if true, most strongly justifies the claim made by Rubco's executives?

(A) In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.

(B) Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.

(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.

(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.

(E) When Maxilux awarded the tire contract to Rubco, the only criterion on which Rubco's bid was clearly ahead of its competitors' bids was price.


1)Can anyone please explain me why we are eliminating B,C and D options?

Option B)As per my understanding we are eliminating B as it talks about the other models of Maxilux company but our concern is how Rubco makes profit on the winning bid for Max 100 ........Please let me know if my understanding is correct on this answer?

Option C talks about less production cost so it should help Rubco in earning profits. Why are we eliminating this option?

Please explain why D is correct?

2)One more question is that in the passage it is mentioned that the Analyst concluded that the bid would only just cover Rubco's cost on tires.Is this a premise/fact ?Do we have to consider this as a fact? Can we attack what analyst concluded?
Premise: The bid to supply tires for the Max 100 will just cover Rubco's costs.
Conclusion: As a result of winning the bid, Rubco will make a profit.
For the conclusion to be valid, what must be true?
As a result of winning the bid, Rubco must be able to make a profit in SOME OTHER WAY.

Answer choice D: When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.
This answer choice shows how Rubco will make a profit: when purchasers of the Max 100 need a new tire, they will buy the specially-designed tire made by Rubco.

The correct answer is D.

Reasons to eliminate:

A: The spare tire is irrelevant. It is given as a PREMISE -- as a FACT not in dispute -- that supplying tires for the Max 100 will not yield a profit.

B: Since these contracts are already held by Rubco, they are not affected by the bid to supply tires for the Max 100.

C: How the tires are produced is irrelevant. It is given as a PREMISE -- as a FACT not in dispute -- that supplying tires for the Max 100 will not yield a profit.

E: Irrelevant. It is given as a PREMISE -- as a FACT not in dispute -- that Rubco supplied the winning bid. The correct answer must show how -- as a RESULT of winning the bid -- Rubco will realize a profit.
I have a disagreement over this.

Profit = Revenue - Cost

If we know the composition of one particle of a soil than me know the whole soil. Similarly if know the cost of 1 Tyre then we know the cost of 1 million tires too.

As per the premise
Profit = 0
Because revenue = cost


Replacement Tyre is also a tyre with the same manufacturing cost and holds the same relationship -

Profit = Revenue - Cost = 0

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davidfrank Junior | Next Rank: 30 Posts
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Post Fri May 10, 2013 3:01 am
I thought that we could never dispute conclusion. My question is also around option c. If the two plants are located close to each other, then my cost of production would come down and thus profit increases. Please tell me why is D a stronger answer. On the other hand if I look at D then even though the tires are supplied new every time a part worns out, the cost of the tyres will remain the same irrespective of the number sold. Please clarify
GMATGuruNY wrote:
rupalikunmun123 wrote:
The Maxilux car company's design for its new luxury model, the Max 100, included a special design for the tires that was intended to complement the model's image. The winning bid for supplying these tires was submitted by Rubco. Analysts concluded that the bid would only just cover Rubco's costs on the tires, but Rubco executives claim that winning the bid will actually make a profit for the company.

Which of the following, if true, most strongly justifies the claim made by Rubco's executives?

(A) In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.

(B) Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.

(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.

(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.

(E) When Maxilux awarded the tire contract to Rubco, the only criterion on which Rubco's bid was clearly ahead of its competitors' bids was price.


1)Can anyone please explain me why we are eliminating B,C and D options?

Option B)As per my understanding we are eliminating B as it talks about the other models of Maxilux company but our concern is how Rubco makes profit on the winning bid for Max 100 ........Please let me know if my understanding is correct on this answer?

Option C talks about less production cost so it should help Rubco in earning profits. Why are we eliminating this option?

Please explain why D is correct?

2)One more question is that in the passage it is mentioned that the Analyst concluded that the bid would only just cover Rubco's cost on tires.Is this a premise/fact ?Do we have to consider this as a fact? Can we attack what analyst concluded?
Premise: The bid to supply tires for the Max 100 will just cover Rubco's costs.
Conclusion: As a result of winning the bid, Rubco will make a profit.
For the conclusion to be valid, what must be true?
As a result of winning the bid, Rubco must be able to make a profit in SOME OTHER WAY.

Answer choice D: When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.
This answer choice shows how Rubco will make a profit: when purchasers of the Max 100 need a new tire, they will buy the specially-designed tire made by Rubco.

The correct answer is D.

Reasons to eliminate:

A: The spare tire is irrelevant. It is given as a PREMISE -- as a FACT not in dispute -- that supplying tires for the Max 100 will not yield a profit.

B: Since these contracts are already held by Rubco, they are not affected by the bid to supply tires for the Max 100.

C: How the tires are produced is irrelevant. It is given as a PREMISE -- as a FACT not in dispute -- that supplying tires for the Max 100 will not yield a profit.

E: Irrelevant. It is given as a PREMISE -- as a FACT not in dispute -- that Rubco supplied the winning bid. The correct answer must show how -- as a RESULT of winning the bid -- Rubco will realize a profit.

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hjafferi Senior | Next Rank: 100 Posts
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Post Wed Aug 22, 2012 10:48 pm
IMO D

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