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# GMAT Prep RC: Companies that must determine well in advance

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Current Student
Joined: 19 Mar 2012
Posts: 4351
Location: India
GMAT 1: 760 Q50 V42
GPA: 3.8
WE: Marketing (Non-Profit and Government)
GMAT Prep RC: Companies that must determine well in advance  [#permalink]

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26 May 2016, 18:34
Question 1
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based on 234 sessions

57% (02:50) correct 43% (02:51) wrong

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Question 2
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based on 205 sessions

74% (01:11) correct 26% (01:48) wrong

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Question 3
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based on 206 sessions

83% (01:04) correct 17% (01:14) wrong

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New GMAT Prep RC Project: 1 RC Every day. Don't forget to time yourself with the stopwatch below to earn kudos.

Companies that must determine well in advance of the selling season how many unites of a new product to manufacture often under-produce 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 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?
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’s

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Current Student
Joined: 19 Mar 2012
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WE: Marketing (Non-Profit and Government)
Re: GMAT Prep RC: Companies that must determine well in advance  [#permalink]

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26 May 2016, 18:35

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Joined: 08 Jul 2015
Posts: 56
GPA: 3.8
WE: Project Management (Energy and Utilities)
Re: GMAT Prep RC: Companies that must determine well in advance  [#permalink]

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26 May 2016, 20:19
souvik101990 wrote:

Thanks for the passage! I spent 6'27'' for it, all correct.
_________________

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Intern
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Posts: 22
Re: GMAT Prep RC: Companies that must determine well in advance  [#permalink]

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28 May 2016, 07:57
1
6 minutes. All three correct
Manager
Joined: 07 Apr 2018
Posts: 105
Re: GMAT Prep RC: Companies that must determine well in advance  [#permalink]

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21 May 2018, 00:16
1
Easy Passage !!

Took 4 mins.

All correct
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Please +1 kudos if my post/reply helps !!

Intern
Joined: 31 Dec 2016
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Location: India
Concentration: Entrepreneurship, Entrepreneurship
GPA: 4
Re: GMAT Prep RC: Companies that must determine well in advance  [#permalink]

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28 May 2018, 21:20
Can someoneone explain me the first spoiler of this passage? I marked D for this spoiler whereas the answer is C.

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Manager
Joined: 14 Oct 2017
Posts: 247
GMAT 1: 710 Q44 V41
GMAT Prep RC: Companies that must determine well in advance  [#permalink]

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29 May 2018, 09:49
About question 1, vaiv123

The last sentence looks as follows
Quote:
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.

Now let's take a look at D and C:

Quote:
D. To provide an example of ways in which companies address the difficulties of forecasting demand

Does the last sentence explain how companies fix the difficulty of forecasting demand? No, it just states that accurate forecasts for the aggregate number of sales are possible but it doesn't explain how these forecasts are generated. Hence, we can rule out answer D.

Quote:
C. To illustrate an assertion about companies’ ability to forecast demand

This answers mentions an assertion, but which one is it talking about? In the previous sentence we find " 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". This quote is the assertion that example in the last sentence illustrates. The example shows that aggregate demand can be forecasted but the specific demand for certain SKUs can be predicted.

Hope that helps
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Manager
Joined: 24 Mar 2018
Posts: 209
Re: GMAT Prep RC: Companies that must determine well in advance  [#permalink]

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17 Jan 2019, 20:44
Masterscorp PP777 workout
Can you please in Q1. how C is correct and E is wrong ?
Re: GMAT Prep RC: Companies that must determine well in advance   [#permalink] 17 Jan 2019, 20:44
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# GMAT Prep RC: Companies that must determine well in advance

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