Thread: new process-pls xplain

Originally Posted by sukonya

Companies considering new cost-cutting manufacturing processes often compare the projected results of making the investment against the alternative of not making the investment with costs, selling prices, and share of market remaining constant.
Which of the following, assuming that each is a realistic possibility, constitutes the most serious disadvantage for companies of using the method above for evaluating the financial benefit of new manufacturing processes?
(A) The costs of materials required by the new process might not be known with certainty. (Out Of Scope)
(B) In several years interest rates might go down, reducing the interest costs of borrowing money to pay for the investment. (Out Of Scope)
(C) Some cost-cutting processes might require such expensive investments that there would be no net gain for many years, until the investment was paid for by savings in the manufacturing process. (Nothing is said that the process may not be fruitful, according to this it will be but some portion will not be available for the companies)
(D) Competitors that do invest in a new process might reduce their selling prices and thus take market share away from companies that do not.
(E) The period of year chosen for averaging out the cost of the investment might be somewhat longer or shorter, thus affecting the result. (Out Of Scope)

IMO D)

thanks a lot

D though A is close but I think D is closer!!!

If I am understanding the Q stem correctly, it s asking that which of the choice will weeken the argument above.
A does that. So i would go with A.
D actually says that if companies will not invest in the new cost cutting methods, their market share will go down, which is essentially reapeting the argument.
Whats the OA?

My answer is D.

The argument talks about the manufacturing process by comparing it with selling prices of today.

In reality, if the selling price of competitors fall, then the whole purpose of selecting the cost-cutting process will fail to reap benefits.

Ans should be D .. Can OA be confirmed?