"The following memo was circulated by the management team of a retail company:

"We are very pleased to announce that the relocation of our inventory, which had been located in four different warehouses throughout the country, to a single new warehouse near Company headquarters in Boston. This consolidated location will cut the company's expenses for warehouse rent in half. As a result we expect our monthly profitability to go up by this amount."


The argument presented is not convincing. The author concludes that having only warehouse instead of four will be more profitable for the company based on many evidence. There are several shacky assumptions resulting in a gap between the premises and the conclusion.

A major assumption made is that relocating the inventory to a single warehouse in boston instead of four warehouses is a good thing. This assumption may very well be wrong, as it may raise some logistics problems; it may be easier to supply a client in Los Angeles when a warehouse is on the west coast than when it is in Boston. Having only one warehouse may be a bad thing.

The validity of the conclusion also depends on the amount of rent saved, a key concept omitted in the argument. This may not be as much as predicted, it may even be more expensive to rent a huge warehouse in Boston than four warehouses across the country but in cheaper cities. The amount saved may not be as high as expected, and thus can hurt the conclusion.

Finally, even if the two assumptions discussed above were true, the argument would still be unconvincing because, without providing any evidence, it supposes that profitability will go up by the amount of rent saved. But what if other costs come into play? For instance shipping costs or logistics costs may drastically grow up when delivering goods to seattle or Dallas, where there was maybe a ware house. As a result, profitability may even fall.

In order to make the argument more persuasive, the author would have to demonstrate that the assumptions above are in fact, true. Thus, evidence supporting that having only one warehouse is a good thing, the amount of rent paid will fall, and that profitability will be up by at least the amount of rent saved in the form of forecasts would tighten the link between the premises and the conclusion making the reasoning better. Without any discussion of the ideas, however, it is impossible to evaluate the conclusion.





Please could you give me some feedback and rating?

cheers,

Cam