A prominent investor who holds a large stake in the Burton Tool Compan

It’s important to remember that this question asks what role the two boldfaced portions play in the argument given. We are not asked what the two boldfaced statements do or what they state. Rather, we’re specifically asked about their role within the argument.

With that in mind, let’s take a look at (B):

The generalization that increased inventory “often indicates that production is outstripping demand” is used to support the investor’s position that the company is mismanaged. The argument is definitely opposes this position. It even goes on to further clarify its opposition to the generalization in this particular instance by stating that “in Burton’s case it (increased inventory) indicates no such thing.” So, the first part of (B) describes the role of the first boldfaced statement.

(B) goes on to suggest that the second boldfaced statement clarifies the meaning of a phrase used in the generalization found in the first boldfaced statement. It does seem to be the case that something about the increase in inventory is clarified. But is it true that the second boldfaced statement clarifies the MEANING of “increased inventory”? No, it does nothing to explain what increased inventory is. Rather, it explains WHY there is increased inventory (“because many products have already been assigned to orders received from customers”). In other words, it doesn’t explain WHAT “increased inventory” MEANS, but rather WHY the “increased inventory” is not attributable to production outstripping demand.

Again, it can also be helpful to remember that we’re looking for the role the boldface plays in the argument. Has the author really included the second boldface just to explain what “increased inventory” means? No. Obviously, the author has a larger agenda in mind, and the meaning of “increased inventory” is not at issue. So, we can eliminate (B).

And here’s (A):

As we already established with (B), the first portion of (A) describes the role of the first boldfaced statement well. So, we must consider the role of the second boldfaced statement. In other words, why does the author explain that “the increase in inventory is entirely attributable to products that have already been assigned to orders received from customers”?

The author has previously granted that, generally, increased inventory means that production is outstripping demand. That would be problematic here, though, because it seems to support the investor’s argument that Burton is mismanaged, and we know that the author disagrees with this position. So, the author goes on to state that Burton is an exception to this generalization. And, in the second boldfaced statement, he/she explains how Burton’s increased inventory is due to products that have already been assigned to orders, and the generalization from the first boldfaced statement does not apply to Burton’s case. This is exactly what (A) describes, and it is correct.

I hope that helps!