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Question - 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.
Essay:
The author of this argument tries to establish how the cost of processing of an organization reduces over time
leading to the reduction in the service cost by taking example of colour film processing and directly drawing an analogy to the
food processing industry. From an apparent look this argument may seem to be sensible but it actually draws a very illogical analogy which
will be explained further.
First, the reduction in the cost of service is not only dependent on the cost of service but also on the cost of raw material,
manual labur and other costs.In case of film processing industry all costs should have reduced only then led to the cost of service
and still making profit. But in case of food industry, even if the processing cost reduces with experience, the raw material and labour
cost, if not reduced will not lead to a reduction in the overall service cost.
Secondly, in color film industry the demand of prints could have increased .
The bulk production of prints to meet this demand may have lead to the price being reduced.
There is no such proof provided for food industry.Additionally, even if the demand would increase
there is no guarantee that the price will reduce.
Thirdly, moving forward to the conclusion, Olympus food who will soon celebrate their 25th birthday, may be using
a kind of machinery to produce their food or a kind of packaging for which they cannot reduce price.
The author's argument is completely undermined by the above mentioned points.If the author wants to convince the readers
he needs to be providing more facts.For example, he has to consider that there is no increase in the raw food material
rather there is a deduction which will lead to reduction of cost and thus profit. As these 2 industries, colour film processing and food processing
are in 2 different stratum, they cannot be drawn in a single analogy based on the experiance with processing leading to reduction in cost.
Please rate.
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.
Essay:
The author of this argument tries to establish how the cost of processing of an organization reduces over time
leading to the reduction in the service cost by taking example of colour film processing and directly drawing an analogy to the
food processing industry. From an apparent look this argument may seem to be sensible but it actually draws a very illogical analogy which
will be explained further.
First, the reduction in the cost of service is not only dependent on the cost of service but also on the cost of raw material,
manual labur and other costs.In case of film processing industry all costs should have reduced only then led to the cost of service
and still making profit. But in case of food industry, even if the processing cost reduces with experience, the raw material and labour
cost, if not reduced will not lead to a reduction in the overall service cost.
Secondly, in color film industry the demand of prints could have increased .
The bulk production of prints to meet this demand may have lead to the price being reduced.
There is no such proof provided for food industry.Additionally, even if the demand would increase
there is no guarantee that the price will reduce.
Thirdly, moving forward to the conclusion, Olympus food who will soon celebrate their 25th birthday, may be using
a kind of machinery to produce their food or a kind of packaging for which they cannot reduce price.
The author's argument is completely undermined by the above mentioned points.If the author wants to convince the readers
he needs to be providing more facts.For example, he has to consider that there is no increase in the raw food material
rather there is a deduction which will lead to reduction of cost and thus profit. As these 2 industries, colour film processing and food processing
are in 2 different stratum, they cannot be drawn in a single analogy based on the experiance with processing leading to reduction in cost.
Please rate.
