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."
The argument that long experience in the food industry will enable Olympic Foods to minimize costs and maximize profits is flaws. Also, there are no details as to whether the excess supply will be met by equivalent demand from the market. Furthermore, the analogy drawn with color film processing is flawed because it does not take into account other factors contributing towards lower film costs such as the popularity of color film over black and white film and raw material costs used in color film processing.
The author also does not discuss as to whether the market will be able to absorb the excess supply of food products by Olympic Foods. This may lead to a situation where Olympic Foods supplies to the market, but there is no inherent demand for the product, leading to loss. SInce it is unclear as to whether there is a demand present, it is impossible to determine whether profits will be maximized.
In drawing the analogy with color film processing the author fails to take into account other factors like cheaper raw material for color film processing that might have led to lower costs. For example, if the processing technology became cheaper or the raw materials such as chemicals became cheaper, the processing costs might have gone down. It is impossible to conclusively determine that efficient processing, as a result of experience, lead to cheaper color film processing costs.
The author can strengthen this argument by giving specific information on whether a demand exists for the excess supply. The argument can be strengthened by providing more information on what specifically contributed to cheaper color film processing costs. As it stands, the argument, remains flawed.
The argument that long experience in the food industry will enable Olympic Foods to minimize costs and maximize profits is flaws. Also, there are no details as to whether the excess supply will be met by equivalent demand from the market. Furthermore, the analogy drawn with color film processing is flawed because it does not take into account other factors contributing towards lower film costs such as the popularity of color film over black and white film and raw material costs used in color film processing.
The author also does not discuss as to whether the market will be able to absorb the excess supply of food products by Olympic Foods. This may lead to a situation where Olympic Foods supplies to the market, but there is no inherent demand for the product, leading to loss. SInce it is unclear as to whether there is a demand present, it is impossible to determine whether profits will be maximized.
In drawing the analogy with color film processing the author fails to take into account other factors like cheaper raw material for color film processing that might have led to lower costs. For example, if the processing technology became cheaper or the raw materials such as chemicals became cheaper, the processing costs might have gone down. It is impossible to conclusively determine that efficient processing, as a result of experience, lead to cheaper color film processing costs.
The author can strengthen this argument by giving specific information on whether a demand exists for the excess supply. The argument can be strengthened by providing more information on what specifically contributed to cheaper color film processing costs. As it stands, the argument, remains flawed.
