garimavyas wrote:
A factory was trying out a new process for producing one of its products, with the goal of reducing production costs. A trial production run using the new process showed a fifteen percent reduction in costs compared with past performance using the standard process. The production managers therefore concluded that the new process did produce a cost savings.
Which of the following, if true, casts most doubt on the production managers' conclusion?
(B) Analysis of the trial of the new process showed that the cost reduction during the trial was entirely attributable to a reduction in the number of finished products rejected by quality control.
(C) While the trial was being conducted, production costs at the factory for a similar product, produced without benefit of the new process, also showed a fifteen percent reduction.
People who select option B, my question to you is:
Can a process of production reduce production costs by reducing the number of defective products?
The answer is Yes. Let's say that the production of a batch of 100 products costs Rs 900, and out of these 100 products, 10 are rejected by the quality control. In this case, the production cost of 90 products (100 -10 rejected) is Rs 900 i.e. Rs 10 per product. If a new process reduces the number of defective products to, let's say, ZERO, the production cost of 100 products would be Rs 900 i.e. Rs 9 per product. Thus, the production costs can be brought down simply by reducing the number of defective products.
Similarly, a process of production can reduce production costs by reducing the amount of paint used to paint the products. There can be numerous ways a production process can reduce production costs.
Option B just mentions one way the new production process reduced the cost. That's fine. How the new production process reduces the costs DOES NOT MATTER.
The reason many mark option B is that they think "Oh! The quality control standards have changed. That's why we're rejecting fewer products. That's why our production costs have come down. Not because of the new process. This option, thus, weakens."
However - and it's a big HOWEVER - nowhere it is mentioned that the quality control standards have changed. If option B had stated so, then it'd be correct. However, it doesn't say that. That the quality control standards have changed is entirely your IMAGINATION. Option B just says that fewer products are rejected by the quality control with the new process. Fewer rejections could be entirely due to the new process.
Now, you may be wondering why you IMAGINED that the quality control standards have changed. The reason is simply narrow thinking. For example:
If I say that black people are caught much more frequently than white people by the police for traffic violations, many of us become absolutely sure that the police is biased. That's narrow thinking. The other possibility is that black people are violating traffic rules much more often than white people. That's why they are caught much more frequently.
By narrow thinking, I mean that when multiple possibilities exist, you are entertaining just one.