A wholesaler of furniture found that it had great success at boosting profits by offering its retail outlets a bulk discount on each item if their order for this winter quarter was at least 30% higher than their last winter quarter order. Many retailers were eligible for the discount. Sales volume grew enough to generate profits, even at the discounted price. The wholesaler plans to offer a similar promotion this spring and hopes for increased profits again.
Which of the following, if true, indicates the greatest flaw in the premise of repeating the promotion this spring?
Choices
A
Most retailers buy no more inventory for the spring quarter than for the winter quarter.
B
The wholesaler will hire more successful sales representatives to make calls and publicize the promotion to local retailers.
C
The retailers whose purchases were exceptionally low last year are the ones most likely to participate in the promotion.
D
The retailers who bought the discounted furniture were not obligated to pass the savings along to their buyers.
E
Buying more furniture in the winter to get the discount left many retailers with excess inventory for the spring quarter.
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Indicates the greatest flaw in the premise
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brianlange77
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This is screaming "E" to me -- if a macro assumption has changed about the ability of retailers to sell the inventory they buy, then you would want to question the validity of the assumption that the promotional effectiveness will remain the same.himu wrote:A wholesaler of furniture found that it had great success at boosting profits by offering its retail outlets a bulk discount on each item if their order for this winter quarter was at least 30% higher than their last winter quarter order. Many retailers were eligible for the discount. Sales volume grew enough to generate profits, even at the discounted price. The wholesaler plans to offer a similar promotion this spring and hopes for increased profits again.
Which of the following, if true, indicates the greatest flaw in the premise of repeating the promotion this spring?
Choices
A
Most retailers buy no more inventory for the spring quarter than for the winter quarter.
B
The wholesaler will hire more successful sales representatives to make calls and publicize the promotion to local retailers.
C
The retailers whose purchases were exceptionally low last year are the ones most likely to participate in the promotion.
D
The retailers who bought the discounted furniture were not obligated to pass the savings along to their buyers.
E
Buying more furniture in the winter to get the discount left many retailers with excess inventory for the spring quarter.
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David@VeritasPrep
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This question is very similar too an Official GMAT question involving glasses. The logic is certainly the same.
If giving discounts to your customers who ordered more merchandise than normal worked last quarter, why would it not work again? In other words, what could be different between the winter when this promotion worked and the spring. What would cause this promotion that worked before to now work now?
Well the only difference that we can clearly anticipate is that the success of the promotion last quarter means that retail outlets have more stock that they normally sell. In other words they may have too much inventory and not need to order again.
This is like when you eat a huge breakfast, you would not want to follow it up with a giant lunch!
If giving discounts to your customers who ordered more merchandise than normal worked last quarter, why would it not work again? In other words, what could be different between the winter when this promotion worked and the spring. What would cause this promotion that worked before to now work now?
Well the only difference that we can clearly anticipate is that the success of the promotion last quarter means that retail outlets have more stock that they normally sell. In other words they may have too much inventory and not need to order again.
This is like when you eat a huge breakfast, you would not want to follow it up with a giant lunch!
