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# MixIt, a company that manufactures smoothie-makers, has been manufactu

Author Message
Manager
Joined: 16 May 2016
Posts: 191
Location: India
Concentration: Marketing, Healthcare
GPA: 3.5
WE: Analyst (Consulting)
MixIt, a company that manufactures smoothie-makers, has been manufactu  [#permalink]

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01 Aug 2018, 19:51
00:00

Difficulty:

15% (low)

Question Stats:

82% (01:18) correct 18% (01:16) wrong based on 45 sessions

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MixIt, a company that manufactures smoothie-makers, has been manufacturing smoothie-makers as well as spare parts for its products. Since old smoothie-makers develop faults and spare parts are required to fix them, MixIt should continue manufacturing spare parts for its older models in the future.

Which of the following, if true, would best support the recommendation that the company should no longer manufacture spare parts for its models?

A. After prolonged use, some of the older models of Mixit smoothie-makers become irreparable.

B. Not many manufacturers of smoothie-makers produce spare parts for their older models

C. It is becoming increasingly cheaper to replace a smoothie-maker with a new one than to get it repaired.

D. The profit margins in the sales of spare parts are significantly lower than the profit margins in the sales of smoothie-makers.

E. Excellent customer service is one of the necessary requirements for a company to be successful in the smoothie-maker market

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MBA Section Director
Affiliations: GMATClub
Joined: 22 May 2017
Posts: 1544
Concentration: Nonprofit
GPA: 4
WE: Engineering (Computer Software)
Re: MixIt, a company that manufactures smoothie-makers, has been manufactu  [#permalink]

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01 Aug 2018, 20:12
A.After prolonged use, some of the older models of Mixit smoothie-makers become irreparable.

This option states that only some of the smoothie makers become irreparable but the others can be reparable and doesn't recommend the company to stop making spare parts for old smoothie makers INCORRECT

B.Not many manufacturers of smoothie-makers produce spare parts for their older models

This option is unrelated as it talks about the other smoothie maker companies. INCORRECT

C.It is becoming increasingly cheaper to replace a smoothie-maker with a new one than to get it repaired.

If it takes more money to repair the smoothie maker than buy a new one, then the customers are going to buy new one instead of repairing old ones. In that case the spare parts for old smoothie makers are going to be unsold in which case it supports the recommendation to stop making the spare parts for old smoothie makers

D.The profit margins in the sales of spare parts are significantly lower than the profit margins in the sales of smoothie-makers.

Eventhough the profit margins are less compared to the margins of sales of smoothie makers, the company still makes profit margins and this option doesn't support the recommendation to stop making the spare parts for old smoothie makers INCORRECT

E.Excellent customer service is one of the necessary requirements for a company to be successful in the smoothie-maker market

This option is unrelated as it talks about customer service required to be successful in smoothie maker market INCORRECT

Hence option C
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Senior Manager
Joined: 17 Jan 2017
Posts: 300
Location: India
GPA: 4
WE: Information Technology (Computer Software)
Re: MixIt, a company that manufactures smoothie-makers, has been manufactu  [#permalink]

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01 Aug 2018, 20:28
Cbirole wrote:
MixIt, a company that manufactures smoothie-makers, has been manufacturing smoothie-makers as well as spare parts for its products. Since old smoothie-makers develop faults and spare parts are required to fix them, MixIt should continue manufacturing spare parts for its older models in the future.

Which of the following, if true, would best support the recommendation that the company should no longer manufacture spare parts for its models?

A.After prolonged use, some of the older models of Mixit smoothie-makers become irreparable.
B.Not many manufacturers of smoothie-makers produce spare parts for their older models
C.It is becoming increasingly cheaper to replace a smoothie-maker with a new one than to get it repaired.
D.The profit margins in the sales of spare parts are significantly lower than the profit margins in the sales of smoothie-makers.
E.Excellent customer service is one of the necessary requirements for a company to be successful in the smoothie-maker market

+1 for C

This is clearly C

If it is cheaper to buy a new Smoothie maker than to repair it then no one will opt to repair a smoothie maker, they'll instead buy one. Hence no use of manufacturing spare parts.
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Re: MixIt, a company that manufactures smoothie-makers, has been manufactu &nbs [#permalink] 01 Aug 2018, 20:28
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