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A manufacturer of men's dress socks sought to increase

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A manufacturer of men's dress socks sought to increase [#permalink] New post 04 Feb 2008, 18:25
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A manufacturer of men's dress socks sought to increase profits by increasing sales. The size of its customer pool was remaining steady, with the average customer buying twelve pairs of dress socks per year. The company's plan was to increase the number of promotional discount-sale periods to one every six months.

Which of the following, if it is a realistic possibility, casts the most serious doubt on the viability of the company's plan?


A] New manufacturing capacity would not be required if the company were to increase the number of pairs of socks sold.
B] Inventory stocks of merchandise ready for sale would be high preceding the increase in the number of discount-sale periods.
C] The manufacturer's competitors would match its discounts during sale periods, and its customers would learn to wait for those times
to make their purchases.
D] New styles and colors would increase customers' consciousness of fashion in dress socks, but the customers' requirements for
older styles and colors would not be reduced.
E] The cost of the manufacturer's raw materials would remain steady, and its customers would have more disposable income.

--------
Please explain.
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Re: CR-manufacturer [#permalink] New post 04 Feb 2008, 18:58
vscid wrote:
A manufacturer of men's dress socks sought to increase profits by increasing sales. The size of its customer pool was remaining steady, with the average customer buying twelve pairs of dress socks per year. The company's plan was to increase the number of promotional discount-sale periods to one every six months.

Which of the following, if it is a realistic possibility, casts the most serious doubt on the viability of the company's plan?


A] New manufacturing capacity would not be required if the company were to increase the number of pairs of socks sold.
B] Inventory stocks of merchandise ready for sale would be high preceding the increase in the number of discount-sale periods.
C] The manufacturer's competitors would match its discounts during sale periods, and its customers would learn to wait for those times
to make their purchases.
D] New styles and colors would increase customers' consciousness of fashion in dress socks, but the customers' requirements for
older styles and colors would not be reduced.
E] The cost of the manufacturer's raw materials would remain steady, and its customers would have more disposable income.

--------
Please explain.


IMO: C

A: if anything it supports the conclusion as it implies the cost will remain same, therefore, economies of scale will kick in...blah..blah...blah
B: this seems more of an observation about reality and is irrelevant for our purposes
C: this seems the correct choice as it implies that the company's plans of increasing profitibility and sale by increasing the frequency of sales will not be realized for two reasons. First, the competitors will match price (eliminates the possibility of stealing market) and customers will start waitng for the discount period; they wouldn't buy more, they'll just change their buying time.
D: if anything, supports the conclusion; as it implies the demand will increase.
E: supports the conclusion
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Re: CR-manufacturer [#permalink] New post 04 Feb 2008, 19:27
vscid wrote:
A manufacturer of men's dress socks sought to increase profits by increasing sales. The size of its customer pool was remaining steady, with the average customer buying twelve pairs of dress socks per year. The company's plan was to increase the number of promotional discount-sale periods to one every six months.

Which of the following, if it is a realistic possibility, casts the most serious doubt on the viability of the company's plan?


A] New manufacturing capacity would not be required if the company were to increase the number of pairs of socks sold.
B] Inventory stocks of merchandise ready for sale would be high preceding the increase in the number of discount-sale periods.
C] The manufacturer's competitors would match its discounts during sale periods, and its customers would learn to wait for those times
to make their purchases.
D] New styles and colors would increase customers' consciousness of fashion in dress socks, but the customers' requirements for
older styles and colors would not be reduced.
E] The cost of the manufacturer's raw materials would remain steady, and its customers would have more disposable income.

--------
Please explain.


Should be (C). Almost went for (A) until I read the "would NOT be required.." part :)
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Re: CR-manufacturer   [#permalink] 04 Feb 2008, 19:27
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