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V02#23 (CR) - Orchard owners' plan

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V02#23 (CR) - Orchard owners' plan [#permalink] New post 12 Jun 2010, 00:13
00:00
A
B
C
D
E

Difficulty:

(N/A)

Question Stats:

0% (00:00) correct 100% (00:10) wrong based on 4 sessions
A small orchard specializing in citrus fruits has been receiving fewer orders for oranges in the off season. Orchard owners expect demand to pick up in the coming weeks as harvest begins, but they are concerned about a neighboring orchard nearly three times their size. The neighboring orchard has announced plans to sell cases of oranges for 20% less than regular price in order to jump-start the season by attracting new business.

Which of the following, if true, points to the most serious flaw of the small orchard's plan to attract business by matching the prices of the competing orchard?

A) The small orchard has a dozen customers under contract to purchase the first oranges of the season and may anger them by not extending the discount to them.
B) The small orchard does not have time to advertise its oranges at lower prices.
C) The small orchard will reduce the number of oranges in each case to minimize losses incurred by matching prices.
D) The large orchard has a larger inventory and is more able to take losses on initially discounted oranges.
E) The large orchard will target a different market than the small orchard.

I am still not convinced with the OA. Please explain.
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Re: V02#23 (CR) - Orchard owners' plan [#permalink] New post 26 Sep 2010, 02:35
IMO E

If OA matches I'll try to explain
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Re: V02#23 (CR) - Orchard owners' plan [#permalink] New post 26 Sep 2010, 06:05
A small orchard specializing in citrus fruits has been receiving fewer orders for oranges in the off season. Orchard owners expect demand to pick up in the coming weeks as harvest begins, but they are concerned about a neighboring orchard nearly three times their size. The neighboring orchard has announced plans to sell cases of oranges for 20% less than regular price in order to jump-start the season by attracting new business.

Which of the following, if true, points to the most serious flaw of the small orchard's plan to attract business by matching the prices of the competing orchard?

A) The small orchard has a dozen customers under contract to purchase the first oranges of the season and may anger them by not extending the discount to them.
Does not weaken. Customers under contract will have to pay the contractual price.

C) The small orchard will reduce the number of oranges in each case to minimize losses incurred by matching prices.
Less oranges at lower prices. This will not weaken the argument.

D) The large orchard has a larger inventory and is more able to take losses on initially discounted oranges.
This is not related to whether the small orchard will or will not be able to attract business.

E) The large orchard will target a different market than the small orchard.
Does not weaken. Even though the large orchard may have a different market, the small orchard will still attract business in its existing market due to its low prices.

B) The small orchard does not have time to advertise its oranges at lower prices.
This seems to be the correct answer. As, if the small orchard does not have enough time to advertise before harvest begins, they will be unable to attract any business based on their plan of lowering prices to attract business.

I go with B. Whats the OA?
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Re: V02#23 (CR) - Orchard owners' plan [#permalink] New post 29 Sep 2010, 02:17
I just did this (on V02). Answered D and got it right.

The main selling point of the plan is to recoup money by getting more business from the initial 20% loss in revenue. If the small orchard can't make up that money then the plan is flawed.

Regarding E -- answer is out of scope. The orchards' respective markets do not directly relate to the problem. In fact, one of the assumptions was that the large orchard is threatening the small orchard's business.

Regarding B -- not having enough time -- this, IMO, at best only slightly weakens the statement regarding the small orchard's plan to sell oranges at 20% off. The issue with not making enough money back to justify the discount (choice D) is a much more serious "flaw."
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Re: V02#23 (CR) - Orchard owners' plan [#permalink] New post 29 Sep 2010, 21:19
I will go with option D even though it sounded like it is a real-world plausible option.
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Re: V02#23 (CR) - Orchard owners' plan   [#permalink] 29 Sep 2010, 21:19
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