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I am having some trouble with coming up with the assumption [#permalink]
18 Apr 2006, 10:27
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I am having some trouble with coming up with the assumption in the following critical reasoning questions. If you see where I can improve or where my logic breaks down, please let me know. Thanks for your input.
1. The First Banking Group's decision to invest in an electronic network for transferring funds was based on a cost advantage over a nonelectronic system of about ten dollars per transaction in using an electronic system. Executives reasoned further that the system would give them an advantage over competitors.
My paraphrase: If the bank decides to invest in the EN -> has cost advantage of $10 over competitors -> therefore bank has advantage over competitors
My assumption: 1) competitors canâ€™t use the bankâ€™s network and 2) competitors cost advantage is less than $10.
The assumption given in the answer key is: Competitors are not using the electronic system yet and wonâ€™t match it.
The second one is:
8. To reduce costs, a company is considering a drastic reduction in the number of middle-level managers. This reduction would be accomplished by first offering early retirement to those 50 years of age or older with 15 years of service, and then by firing enough of the others to bring the overall reduction to 50 percent.
My paraphrase: need to fire 50% of manager -> offering buyouts to managers over 50 and with 15+ YOS -> if not enough -> fire others
My assumption: 1) middle managers are over 50+ age and have 15+ YOS and 2) managers 50+ age and 15 YOS make up at least 50% of the middle managers.
The assumption given in the answer key is: Reducing costs by firing will not hurt companyâ€™s productivity: 50 percent of managers left will be able to do the double work load