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hzone.iitian
- Newbie | Next Rank: 10 Posts
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1. 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 twenty-fifth birthday, we can
expect that our long experience will enable us to minimize costs and thus maximize
profits."
Discuss how well reasoned you find this argument. In your discussion be sure to
analyze the line of reasoning and the use of evidence in the argument. For
example, you may need to consider what questionable assumptions underlie the
thinking and what alternative explanations or counterexamples might weaken the
conclusion. You can also discuss what sort of evidence would strengthen or refute
the argument, what changes in the argument would make it more logically sound,
and what, if anything, would help you better evaluate its conclusion.
My Response
The author concludes that Olympic Foods will be able to reduce the overall cost owing to its 25 years of operational experience. In support of this conclusion author provided two evidences, first, a general perception that organizations become efficient as they grow older and the second, in support of the general perception, he mentions example of color industry where cost came down by more than 50 percent between years 1970 to 1984. However, the prediction suffers critical flaws and evidences are not sufficient for conclusion.
The author provides example of color industry but fails to provide any substantial basis for comparison of food industry and color industry. In fact, these two industries are quite different in their business model and daily activity. For example, the raw materials used in color industry such as color, film, printing paper etc can be stored for long period of time. Hence, in this industry one can reduce cost by buying more raw materials at lower cost particularly when prices are low. However, the same is not true for food industry. In fact, the raw material for food industry cannot be stored beyond a specific short period. Many such differences between the industries make it difficult to compare the two.
Also, author's evidence, that processing cost and time of print came down by more than 50 percent in 14 years, should be looked more closely. The author has almost concluded that the change in processing cost and time is result of operational experience only. However, the argument fails to provide the key information, which is whether cost and time has come down for experienced companies only or for all companies, irrespective of their experience in industry. It should be noted that 14 years are sufficient for technological innovation of the overall process. As a result it might prove that operational experience becomes immaterial in reduction of cost and time. However, one cannot expect similar innovation in cost and processing time in food industry.
As it stands, the argument is severely flawed and inconclusive. To support the conclusion better, author needs to provide similarities between two industries. Also, just mentioning general perception that experience will help reduce the cost, is not sufficient. Author needs to mention the changes that Olympic Foods brought in its operations from its experience to reduce the cost. Further, the author needs to compare the operation cost of Olympic Foods with new food processing companies to conclude that lower operation cost is result of experience only.
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 twenty-fifth birthday, we can
expect that our long experience will enable us to minimize costs and thus maximize
profits."
Discuss how well reasoned you find this argument. In your discussion be sure to
analyze the line of reasoning and the use of evidence in the argument. For
example, you may need to consider what questionable assumptions underlie the
thinking and what alternative explanations or counterexamples might weaken the
conclusion. You can also discuss what sort of evidence would strengthen or refute
the argument, what changes in the argument would make it more logically sound,
and what, if anything, would help you better evaluate its conclusion.
My Response
The author concludes that Olympic Foods will be able to reduce the overall cost owing to its 25 years of operational experience. In support of this conclusion author provided two evidences, first, a general perception that organizations become efficient as they grow older and the second, in support of the general perception, he mentions example of color industry where cost came down by more than 50 percent between years 1970 to 1984. However, the prediction suffers critical flaws and evidences are not sufficient for conclusion.
The author provides example of color industry but fails to provide any substantial basis for comparison of food industry and color industry. In fact, these two industries are quite different in their business model and daily activity. For example, the raw materials used in color industry such as color, film, printing paper etc can be stored for long period of time. Hence, in this industry one can reduce cost by buying more raw materials at lower cost particularly when prices are low. However, the same is not true for food industry. In fact, the raw material for food industry cannot be stored beyond a specific short period. Many such differences between the industries make it difficult to compare the two.
Also, author's evidence, that processing cost and time of print came down by more than 50 percent in 14 years, should be looked more closely. The author has almost concluded that the change in processing cost and time is result of operational experience only. However, the argument fails to provide the key information, which is whether cost and time has come down for experienced companies only or for all companies, irrespective of their experience in industry. It should be noted that 14 years are sufficient for technological innovation of the overall process. As a result it might prove that operational experience becomes immaterial in reduction of cost and time. However, one cannot expect similar innovation in cost and processing time in food industry.
As it stands, the argument is severely flawed and inconclusive. To support the conclusion better, author needs to provide similarities between two industries. Also, just mentioning general perception that experience will help reduce the cost, is not sufficient. Author needs to mention the changes that Olympic Foods brought in its operations from its experience to reduce the cost. Further, the author needs to compare the operation cost of Olympic Foods with new food processing companies to conclude that lower operation cost is result of experience only.
Hitendra
