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."
I could find following flaws in the argument:
1)What happens in colour film processing may not relate to food processing...
Maybe cost of raw material or labour used for color printing went down during that time.
2)end product in food processing industry is perishable, while end product in color film industry is non perishable, so its illogical comparison.
2)Mere completion of 25 years cannot ensure cost minimization, as the argument does not mention how they will do it , what methods will they adopt to ensure it.
3)Whether the demand for food processing will be there in future,people might prefer unprocessed food in future..
4)No of competitors in future, whether they inc or decrease could have impact on pricing.
I could think of these points. Please provide insight if these are sufficient to work on or their are other flaws that can be found out for the given argument.
"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."
I could find following flaws in the argument:
1)What happens in colour film processing may not relate to food processing...
Maybe cost of raw material or labour used for color printing went down during that time.
2)end product in food processing industry is perishable, while end product in color film industry is non perishable, so its illogical comparison.
2)Mere completion of 25 years cannot ensure cost minimization, as the argument does not mention how they will do it , what methods will they adopt to ensure it.
3)Whether the demand for food processing will be there in future,people might prefer unprocessed food in future..
4)No of competitors in future, whether they inc or decrease could have impact on pricing.
I could think of these points. Please provide insight if these are sufficient to work on or their are other flaws that can be found out for the given argument.
