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."
Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
The memo states that due to the relocation of the inventory from four different warehouses to a single warehouse, the company will cut its expenses for warehouse rent by half. Hence, the management expects to increase the monthly profitability by this amount. Though this argument may seem valid at first glance, on close inspection, it is severely flawed and poorly reasoned owing to lack of key information and questionable underlying assumptions. The argument also leaves a wide scope for counter argument and is not well substantiated.
The management wrongly assumes that reducing the warehouse rent by half will cut the overall expenses of the company. It is highly possible that relocation of the inventory to a single location might induce some further expenses which were not there when the inventory was distributed in four different warehouses. For example, the company might have to incur additional transportation costs now that their inventory location is consolidated; distribution of inventory to a location which was near one of the earlier warehouses but far from the current warehouse will become costlier. In this case, the monthly profitability can not be increased by the amount saved from warehouse rent and the argument stands invalid.
Moreover, the argument fails to include important information which can help deduce the monthly profitability of the company. There has been no mention whatsoever of additional expenses arising due to inventory relocation or any other one-time expenses incurred during relocation. The monthly profitability will not be equal to the amount saved from warehouse rent as stated in the argument. On the other hand, it may be possible that these additional expenses such as the extra transportation costs as mentioned above might turn out to be greater than the savings from warehouse rent leading to a decrease in profits. The argument is completely negated in this scenario.
The argument leaves scope for counter evidence as discussed above. More counter evidence can be produced to counter this arguments conclusion. For example, if the stores where the company distributes its inventory are nearby the 4 old warehouses but far away from the new warehouse, it is logistically impractical to shift the inventory location. The evidence used in the argument only supports the reduced warehouse rent and fails to take in other factors which will also affect the profitability of the company.
All these above reasons make this argument poorly reasoned and illogical. However, if the management were to produce further supporting evidence such as other benefits of relocation or the proximity of retail stores to their new warehouse, the argument would gain some strength. However, the claim that profits will increase by the amount saved from warehouse rent is very questionable and unlikely to happen. There will always be further benefits or losses arising due to relocation and this is an improper conclusion.
"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."
Discuss how well reasoned you find this argument. Point out flaws in the argument's logic and analyze the argument's underlying assumptions. In addition, evaluate how supporting evidence is used and what evidence might counter the argument's conclusion. You may also discuss what additional evidence could be used to strengthen the argument or what changes would make the argument more logically sound.
The memo states that due to the relocation of the inventory from four different warehouses to a single warehouse, the company will cut its expenses for warehouse rent by half. Hence, the management expects to increase the monthly profitability by this amount. Though this argument may seem valid at first glance, on close inspection, it is severely flawed and poorly reasoned owing to lack of key information and questionable underlying assumptions. The argument also leaves a wide scope for counter argument and is not well substantiated.
The management wrongly assumes that reducing the warehouse rent by half will cut the overall expenses of the company. It is highly possible that relocation of the inventory to a single location might induce some further expenses which were not there when the inventory was distributed in four different warehouses. For example, the company might have to incur additional transportation costs now that their inventory location is consolidated; distribution of inventory to a location which was near one of the earlier warehouses but far from the current warehouse will become costlier. In this case, the monthly profitability can not be increased by the amount saved from warehouse rent and the argument stands invalid.
Moreover, the argument fails to include important information which can help deduce the monthly profitability of the company. There has been no mention whatsoever of additional expenses arising due to inventory relocation or any other one-time expenses incurred during relocation. The monthly profitability will not be equal to the amount saved from warehouse rent as stated in the argument. On the other hand, it may be possible that these additional expenses such as the extra transportation costs as mentioned above might turn out to be greater than the savings from warehouse rent leading to a decrease in profits. The argument is completely negated in this scenario.
The argument leaves scope for counter evidence as discussed above. More counter evidence can be produced to counter this arguments conclusion. For example, if the stores where the company distributes its inventory are nearby the 4 old warehouses but far away from the new warehouse, it is logistically impractical to shift the inventory location. The evidence used in the argument only supports the reduced warehouse rent and fails to take in other factors which will also affect the profitability of the company.
All these above reasons make this argument poorly reasoned and illogical. However, if the management were to produce further supporting evidence such as other benefits of relocation or the proximity of retail stores to their new warehouse, the argument would gain some strength. However, the claim that profits will increase by the amount saved from warehouse rent is very questionable and unlikely to happen. There will always be further benefits or losses arising due to relocation and this is an improper conclusion.
