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# Companies that must determine well in advance of the selling season

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Companies that must determine well in advance of the selling season  [#permalink]

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Updated on: 05 May 2018, 01:39
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Companies that must determine well in advance of the selling season how many units of a new product to manufacture often underproduce products that sell well and have overstocks of others. The increased incidence in recent years of mismatches between production and demand seems ironic, since point-of-sale scanners have improved data on consumers’ buying patterns and since flexible manufacturing has enabled companies to 24 produce, cost-effectively, small quantities of goods. This type of manufacturing has greatly increased the number of new products introduced annually in the United States. However, frequent introductions of new products have two problematic side effects. For one, they reduce the average lifetime of products; more of them are neither at the beginning of their life (when prediction is difficult) or at the end of their life (when keeping inventory is expensive because the products will soon become obsolete). For another, as new products proliferate, demand is divided among a growing number of stock-keeping units (SKU’s). Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult. For example, a company may be able to estimate accurately the aggregate number of shoes it will sell, but it may be uncertain about which specific types of shoes will sell more than other types.

1. Which of the following most accurately describes the function of the last sentence in the passage (Last 2 lines)?

(A) To cite a situation in which the aggregate demand is more important than the distribution of demand among SKU’s

(B) To refute an assertion about the side effects of flexible manufacturing

(C) To illustrate an assertion about companies’ ability to forecast demand

(D) To provide an example of ways in which companies address the difficulties of forecasting demand

(E) To note an exception to the author’s assertion about distributing demand among SKU’s

2. The passage suggests which of the following about divided demand among a growing number of SKU’s?

(A) It has increased the average lifetime of products.

(B) It has resulted from retailer’s attempts to predict demand more accurately and avoid both understocks and overstocks.

(C) It has decreased the use of flexible manufacturing by companies.

(D) It has not increased the expense of keeping inventory of certain products.

(E) It has not prevented companies from predicting aggregate demand with some certainty.

3. According to the passage, which of the following has led to growth in the number of new products introduced in the United States each year?

(A) Reduced average lifetime of products

(B) Increased ability to forecast aggregate demand

(C) More cost-effective ways of keeping inventory for products

(D) Cost-effective production of small quantities of goods

(E) Increased ability to divide demand among a number of SKU’s and to forecast how that demand will be distributed among those SKU’

Originally posted by roopika2990 on 16 Jan 2013, 05:05.
Last edited by hazelnut on 05 May 2018, 01:39, edited 3 times in total.
##### Most Helpful Community Reply
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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01 Aug 2015, 07:54
5
anewbeginning wrote:
Dear Moderators/Experts,

Can you please shed some light on Q1 options C,D and E. I selected C, but I was unsure about it.

Please if you can explain why not choice D and E -

D. To provide an example of ways in which companies address the difficulties of forecasting demand
E. To note an exception to the author’s assertion about distributing demand among SKU’s

Thanks

Hello anewbeginning

Here is the text from passage:
Sentence before (we need it because text from question begins from text "for example" so these sentences are linked):
"Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult. "
and sentence from question:
"For example, a company may be able to estimate accurately the aggregate number of shoes it will sell, but it may be uncertain about which specific types of shoes will sell more than other types."

answer D: "To provide an example of ways in which companies address the difficulties of forecasting demand"
According to the passage companies just have these difficulties and we don't know exactly do they do something about it or no. (logically they do, but passage doesn't mention it)

answer E: "To note an exception to the author’s assertion about distributing demand among SKU’s"
This is counteract to what we see in passage:

Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult. For example, a company may be able to estimate accurately the aggregate number of shoes it will sell, but it may be uncertain about which specific types of shoes will sell more than other types.

So first sentence says that companies can make total estimate, but can't make estimate of certain type
and further example says that companie can estimate total quantity of shoes but can't estimate sells of specific model of shoes.

We don't have any exception in this example and it completely support assertion from first sentence.

answer C: "To illustrate an assertion about companies’ ability to forecast demand"
First sentence assert that companies can make total estimate, but can't make estimate of certain type and second sentence make specific example of this assertion.
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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23 Jan 2013, 05:47
IMO 1C / 2E / 3D
Hope It's right.
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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23 Jan 2013, 21:03
2 must be D.
'predicet with some certainty for some product " means D.
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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05 Mar 2015, 02:19
C E D. It was difficult to understand the first sentence of the passage.
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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01 Aug 2015, 04:19
1
Dear Moderators/Experts,

Can you please shed some light on Q1 options C,D and E. I selected C, but I was unsure about it.

Please if you can explain why not choice D and E -

D. To provide an example of ways in which companies address the difficulties of forecasting demand
E. To note an exception to the author’s assertion about distributing demand among SKU’s

Thanks
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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01 Aug 2015, 12:24
Harley1980 wrote:
anewbeginning wrote:
Dear Moderators/Experts,

Can you please shed some light on Q1 options C,D and E. I selected C, but I was unsure about it.

Please if you can explain why not choice D and E -

D. To provide an example of ways in which companies address the difficulties of forecasting demand
E. To note an exception to the author’s assertion about distributing demand among SKU’s

Thanks

Hello anewbeginning

Here is the text from passage:
Sentence before (we need it because text from question begins from text "for example" so these sentences are linked):
"Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult. "
and sentence from question:
"For example, a company may be able to estimate accurately the aggregate number of shoes it will sell, but it may be uncertain about which specific types of shoes will sell more than other types."

answer D: "To provide an example of ways in which companies address the difficulties of forecasting demand"
According to the passage companies just have these difficulties and we don't know exactly do they do something about it or no. (logically they do, but passage doesn't mention it)

answer E: "To note an exception to the author’s assertion about distributing demand among SKU’s"
This is counteract to what we see in passage:

Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult. For example, a company may be able to estimate accurately the aggregate number of shoes it will sell, but it may be uncertain about which specific types of shoes will sell more than other types.

So first sentence says that companies can make total estimate, but can't make estimate of certain type
and further example says that companie can estimate total quantity of shoes but can't estimate sells of specific model of shoes.

We don't have any exception in this example and it completely support assertion from first sentence.

answer C: "To illustrate an assertion about companies’ ability to forecast demand"
First sentence assert that companies can make total estimate, but can't make estimate of certain type and second sentence make specific example of this assertion.

Thank You Harley1980

Your explanation is crisp and to the point.
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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16 May 2017, 21:53
1
HI GMATNinja, GMATNinjaTwo,

Can somebody explain these two que

The passage suggests which of the following about divided demand among a growing number of SKU’s?
A. It has increased the average lifetime of products.
B. It has resulted from retailer’s attempts to predict demand more accurately and avoid both understocks and overstocks.
C. It has decreased the use of flexible manufacturing by companies.
D. It has not increased the expense of keeping inventory of certain products.
E. It has not prevented companies from predicting aggregate demand with some certainty.

I've marked B

According to the passage, which of the following has led to growth in the number of new products introduced in the United States each year?
A. Reduced average lifetime of products
B. Increased ability to forecast aggregate demand
C. More cost-effective ways of keeping inventory for products
D. Cost-effective production of small quantities of goods
E. Increased ability to divide demand among a number of SKU’s and to forecast how that demand will be distributed among those SKU’

Why not A
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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06 Jun 2017, 04:02
2
NandishSS wrote:
HI GMATNinja, GMATNinjaTwo,

Can somebody explain these two que

The passage suggests which of the following about divided demand among a growing number of SKU’s?
A. It has increased the average lifetime of products.
B. It has resulted from retailer’s attempts to predict demand more accurately and avoid both understocks and overstocks.
C. It has decreased the use of flexible manufacturing by companies.
D. It has not increased the expense of keeping inventory of certain products.
E. It has not prevented companies from predicting aggregate demand with some certainty.

I've marked B

According to the passage, which of the following has led to growth in the number of new products introduced in the United States each year?
A. Reduced average lifetime of products
B. Increased ability to forecast aggregate demand
C. More cost-effective ways of keeping inventory for products
D. Cost-effective production of small quantities of goods
E. Increased ability to divide demand among a number of SKU’s and to forecast how that demand will be distributed among those SKU’

Why not A

Hi,

I saw you asked this question about 20 days ago and there has been no response so far, so I just wanna share some thoughts. Hope this helps.

Q3: The passage suggests which of the following about divided demand among a growing number of SKU’s?

--> Look for key words "divided demand among a growing number of SKU’s" at the end of the passage, and read related sentences (especially the last 3 sentences). Now we understand that "divided demand among a growing number of SKU’s" is the second side effect of "frequent introductions of new products"

A. It has increased the average lifetime of products.
--> This option brings information in another part (the first side effect) then put it in a relation with the second side effect. Wrong! There is no such a relationship between these two effects. Also, the option also distorts the first side effect, because, as mentioned in the passage, the average lifetime of products "decreased", rather than "increased".

B. It has resulted from retailer’s attempts to predict demand more accurately and avoid both understocks and overstocks.
--> If there is a causal relationship here, it is "divided demand among a growing number of SKU’s" that led to "retailer’s attempts to predict demand more accurately and avoid.....", rather than came from (resulted from) retailer's attempts. Therefore, (B) is wrong.

C. It has decreased the use of flexible manufacturing by companies.
--> It is true that "divided demand among a growing number of SKU’s" is a negative impact of "flexible manufacturing". However, it is nowhere is the passage we can conclude that this negative effect has decreased the use of this type of manufacturing. Another wrong choice.

D. It has not increased the expense of keeping inventory of certain products.
--> Similar to (A), choice (D) just twisted the information by bringing information about the first side effect (expense of keeping inventory of certain products) to put in a relationship with the second side effect. Wrong!

E. It has not prevented companies from predicting aggregate demand with some certainty.
--> Yes, this is exactly what is mentioned at the end of the passage - "Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult."

Q4: According to the passage, which of the following has led to growth in the number of new products introduced in the United States each year?

Well if you read the passage carefully enough in initial reading, you may quickly spot rightly the sentence mentioning the cause of of "growth in the number of new products introduced in the United States each year". It is quite at the middle of the passage ".....and since flexible manufacturing has enabled companies to 24 produce, cost-effectively, small quantities of goods. This type of manufacturing has greatly increased the number of new products introduced annually in the United States.". There you are, the correct answer is pretty clear now. But we still need to eliminate incorrect answer choices.

A. Reduced average lifetime of products
--> Wrong! This a problematic effect, rather than the cause, of frequent introduction of new products.

B. Increased ability to forecast aggregate demand
--> Wrong. It is mentioned in the passage that "manufacturers and retailers can forecast aggregate demand with some certainty", but this inherent ability has nothing to do with frequency of new products' introduction.

C. More cost-effective ways of keeping inventory for products
--> Wrong. Similar to choice (A), "keeping inventory for products" is just mentioned as an impact, not the cause, of frequent introduction of new products.

D. Cost-effective production of small quantities of goods
--> Exactly!

E. Increased ability to divide demand among a number of SKU’s and to forecast how that demand will be distributed among those SKU’.
--> Wrong. First of all, "the ability to forecast how that demand will be distributed among those SKU’" is an inherent difficulty, and is totally not related to frequent introduction of new products.
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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11 Jun 2017, 01:10
Lucy Phuong wrote:
NandishSS wrote:
HI GMATNinja, GMATNinjaTwo,

Can somebody explain these two que

The passage suggests which of the following about divided demand among a growing number of SKU’s?
A. It has increased the average lifetime of products.
B. It has resulted from retailer’s attempts to predict demand more accurately and avoid both understocks and overstocks.
C. It has decreased the use of flexible manufacturing by companies.
D. It has not increased the expense of keeping inventory of certain products.
E. It has not prevented companies from predicting aggregate demand with some certainty.

I've marked B

According to the passage, which of the following has led to growth in the number of new products introduced in the United States each year?
A. Reduced average lifetime of products
B. Increased ability to forecast aggregate demand
C. More cost-effective ways of keeping inventory for products
D. Cost-effective production of small quantities of goods
E. Increased ability to divide demand among a number of SKU’s and to forecast how that demand will be distributed among those SKU’

Why not A

Hi,

I saw you asked this question about 20 days ago and there has been no response so far, so I just wanna share some thoughts. Hope this helps.

Q3: The passage suggests which of the following about divided demand among a growing number of SKU’s?

--> Look for key words "divided demand among a growing number of SKU’s" at the end of the passage, and read related sentences (especially the last 3 sentences). Now we understand that "divided demand among a growing number of SKU’s" is the second side effect of "frequent introductions of new products"

A. It has increased the average lifetime of products.
--> This option brings information in another part (the first side effect) then put it in a relation with the second side effect. Wrong! There is no such a relationship between these two effects. Also, the option also distorts the first side effect, because, as mentioned in the passage, the average lifetime of products "decreased", rather than "increased".

B. It has resulted from retailer’s attempts to predict demand more accurately and avoid both understocks and overstocks.
--> If there is a causal relationship here, it is "divided demand among a growing number of SKU’s" that led to "retailer’s attempts to predict demand more accurately and avoid.....", rather than came from (resulted from) retailer's attempts. Therefore, (B) is wrong.

C. It has decreased the use of flexible manufacturing by companies.
--> It is true that "divided demand among a growing number of SKU’s" is a negative impact of "flexible manufacturing". However, it is nowhere is the passage we can conclude that this negative effect has decreased the use of this type of manufacturing. Another wrong choice.

D. It has not increased the expense of keeping inventory of certain products.
--> Similar to (A), choice (D) just twisted the information by bringing information about the first side effect (expense of keeping inventory of certain products) to put in a relationship with the second side effect. Wrong!

E. It has not prevented companies from predicting aggregate demand with some certainty.
--> Yes, this is exactly what is mentioned at the end of the passage - "Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult."

Q4: According to the passage, which of the following has led to growth in the number of new products introduced in the United States each year?

Well if you read the passage carefully enough in initial reading, you may quickly spot rightly the sentence mentioning the cause of of "growth in the number of new products introduced in the United States each year". It is quite at the middle of the passage ".....and since flexible manufacturing has enabled companies to 24 produce, cost-effectively, small quantities of goods. This type of manufacturing has greatly increased the number of new products introduced annually in the United States.". There you are, the correct answer is pretty clear now. But we still need to eliminate incorrect answer choices.

A. Reduced average lifetime of products
--> Wrong! This a problematic effect, rather than the cause, of frequent introduction of new products.

B. Increased ability to forecast aggregate demand
--> Wrong. It is mentioned in the passage that "manufacturers and retailers can forecast aggregate demand with some certainty", but this inherent ability has nothing to do with frequency of new products' introduction.

C. More cost-effective ways of keeping inventory for products
--> Wrong. Similar to choice (A), "keeping inventory for products" is just mentioned as an impact, not the cause, of frequent introduction of new products.

D. Cost-effective production of small quantities of goods
--> Exactly!

E. Increased ability to divide demand among a number of SKU’s and to forecast how that demand will be distributed among those SKU’.
--> Wrong. First of all, "the ability to forecast how that demand will be distributed among those SKU’" is an inherent difficulty, and is totally not related to frequent introduction of new products.

Im sorry but I don't get it

E. It has not prevented companies from predicting aggregate demand with some certainty.
--> Yes, this is exactly what is mentioned at the end of the passage - "Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult."

It is mentioned that they can forecast aggregate demand with some certainty, but not that they actually do ???

Am I missing something ?
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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11 Jun 2017, 01:35
1
daviddaviddavid wrote:

Im sorry but I don't get it

E. It has not prevented companies from predicting aggregate demand with some certainty.
--> Yes, this is exactly what is mentioned at the end of the passage - "Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult."

It is mentioned that they can forecast aggregate demand with some certainty, but not that they actually do ???

Am I missing something ?

Hi,

Here we have 2 tasks:
(1) predicting aggregate demand
(2) predicting divided demand

Do you see any relation between the ability to predict aggregate demand(1) and the ability to predict divided demand(2) ? NO! And the situation mentioned in the passage is that
- Company can do (1)
- Company cannot do (2)

=> Even though companies cannot do (2), they can do (1). In other words, the inability to do (2) cannot prevent the companies to do (1). That's what option (E) states.

Does that make sense?
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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11 Jun 2017, 01:56
Lucy Phuong wrote:
daviddaviddavid wrote:

Im sorry but I don't get it

E. It has not prevented companies from predicting aggregate demand with some certainty.
--> Yes, this is exactly what is mentioned at the end of the passage - "Even though manufacturers and retailers can forecast aggregate demand with some certainty, forecasting accurately how that demand will be distributed among the many SKU’s they sell is difficult."

It is mentioned that they can forecast aggregate demand with some certainty, but not that they actually do ???

Am I missing something ?

Hi,

Here we have 2 tasks:
(1) predicting aggregate demand
(2) predicting divided demand

Do you see any relation between the ability to predict aggregate demand(1) and the ability to predict divided demand(2) ? NO! And the situation mentioned in the passage is that
- Company can do (1)
- Company cannot do (2)

=> Even though companies cannot do (2), they can do (1). In other words, the inability to do (2) cannot prevent the companies to do (1). That's what option (E) states.

Does that make sense?

yes thx

I Think I got it know

So even though they cannot predict divided demand they still can predict aggregate demand with some certainty
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Re: Companies that must determine well in advance of the selling season  [#permalink]

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19 Jul 2018, 23:29
Yes, you are correct. How long did it take you to read and get all the correct answers?
Alpach wrote:
IMO 1C / 2E / 3D
Hope It's right.

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Re: Companies that must determine well in advance of the selling season  [#permalink]

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06 Nov 2018, 20:28
5 Mins , 30 seconds - All correct .
Should such a passage take lesser time ?
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Re: Companies that must determine well in advance of the selling season &nbs [#permalink] 06 Nov 2018, 20:28
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# Companies that must determine well in advance of the selling season

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