Bullseye Store recently implemented a cost cutting plan

Main theme of the argument : is cost cutting ; and that is done to achieve profitability ..
since customer s are leaving the store w/o making a purchase ; it means that store is not making any sales/revenue
option B The plan will result in a net increase profits only if cost savings resulting from reductions in hourly wages exceed the reduction in profits resulting from decreased purchases and revenue ; is on the lines of the argument and would be correct
IMO B

I am not able to understand why option D is wrong. Can someone please explain?

See,the option states that the waiting time play an important role in selecting the place where they can shop. But the situation is,in a way, opposite.The customers have already selected the stuff and are standing in the queue n its then they encounter the waiting time. It means that waiting time played no role in selecting the place for shopping.

I hope this helps.

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Bullseye Store recently implemented a cost cutting plan in which the number of cashiers working per shift was reduced. This reduction has increased the average time customers must wait in line to pay. Since the plan was implemented, the store manager has noticed several customers leaving the store without making a purchase after waiting in line for several minutes.

Type- inference

A. Bullseye could reduce the number of sales lost by reassigning some employees from stocking shelves to working as cashiers. - Incorrect; what if we lose more sales because the items were not stocked properly as there were fewer employees assigned the task of stocking shelves

B. The plan will result in a net increase in profits only if cost savings resulting from reductions in hourly wages exceed the reduction in profits resulting from decreased purchases and revenue.- Correct
Net profit(or loss) because of plan= cost savings resulting from reductions in hourly wages - reduction in profits resulting from decreased purchases and revenue
On the other hand, if the reduction in profits resulting from decreased purchases and revenue is greater than cost savings resulting from reductions in hourly wages, then we would have a net loss because of this plan.

C. Wait times at Bullseye are likely now longer than wait times at competing stores.- Out of scope- we have no information about relative wait times

D. Most customers consider wait time an important factor in choosing where to shop. - Incorrect- the word 'most' makes this answer incorrect because the manager noticed several customers leaving the store without making a purchase after waiting in line for several minutes ; 'Some customers might consider wait time an important factor in choosing where to shop' would be a better answer

E. Bullseye could decrease wait times by shifting cashiers to shifts during which there are more customers in the store.- incorrect; We are not even sure if there is a surge in the number of customers during certain times in a day ; it may be that throughout the day there is a constant number of customers in the store.

Answer B



riyagoyal,
Hope this helps!

While I went with B I am surprised by how easily most people dismissed option A.

I was tempted by A as it seemed to be an easy fix, however, after a second round of consideration option B won out.

Option B brings out of the Stimulus information about computation of net profit. I am not sure how easily it is being said. BullsEyeStore can be a grocery store, and we have not considered wastage and may be other factors while computing the net profit. How likely is that such Answer Choices will come in GMAT Inference/Conclusion question where outside logic has turned out to be the correct answer?
I went for Option C even when the information of other store is not given, because it is considering the possibility of wait time to be longer than other stores, which I believe can be concluded from the Stimulus.

can someone please help with this?

DmitryFarber VeritasKarishma GMATNinja

thecoronafever B is generalizing whole plan no matter whether it's of confectionery or general store.
Option B states "The plan will only give positive result if cost savings from reductions in hourly wages exceed the reduction in profits resulting from decreased purchases and revenue."
Let say the Bullseye store layoff 15 candidates and their hourly wage is 150$ bucks. Whereas the lose of revenue from losing customers on an hourly average is 100$. Therefore the total revenue from the overall plan is 50$ but if the whole planed worked opposite there would have been lose. So it's the only statement validating the situation given in the passage.

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Well, you might have not again considered the wastage in picture. In Option B, decrease purchases means decrease in sales.

Now, let me present with the example of grocery:
Suppose, the store is getting grocery and since customers are not leaving the grocery, that grocery is getting wasted, and that's the loss outside of reduced sales or revenue and thus is not captured within the Option B. There might be other factors in computation of net profit apart from just reduced sales or revenue which might not be considered and thus, rightness of this Option B relies on that the fact that "only reduced sales or revenue, or cost saved from employing less staff are enough to compute the net profit" is well established. Is it really?

There are many possibilities except what is stated but we don't consider that in GMAT. Keep that in mind, we never consider possible cases In GMAT but what is stated in passage. Since the passage don't mention the inventory wastage or profit. We can't consider that.

We have to assume that everything else stays the same. When we say that fewer cashiers were retained to cut cost, the only impact we know is that cost was cut. Next the argument tells us that people have been dropping out of purchasing. So now we know that fewer cashiers has resulted in loss in revenue.
We can say that the plan will lead to higher profit only if (necessary condition) 'money saved' is more than 'money lost'. We still may not get higher profit because it may still not be sufficient (because of other factors). But it is certainly necessary. If money lost because of customers dropping purchases is higher, anyway higher profit cannot be achieved.

I've my doubts with option B. The text says the number of cashiers working per shift have been reduced. The hourly wages remain the same, for each cashier. So if earlier 5 were working, at a pay of say Rs 30000/month, and now 4 are working, the overall wage that the employer has to pay has gone down by Rs 30000/month, but is it okay to interpret it as reduction in hourly wages ?
What I'm not comfortable about is calling reduction in number of employees as reduction in hourly wages.

The plan is a cost cutting plan, so information we have should support the objective to cut costs.

A defeats the purpose of the plan and is almost counterintuitive as those staff shelf-stocking staff would then need to be replaced.
B is correct because it basically tells us 'the plan (to cut costs) will be successful only if the cost of losing sales is outweighed by the cost of less people. It basically tells us the conditions for the plan to succeed and this information is what we have in the passge.
C is not supported by the passage - we have no information on other stores. Therefore incorrect.
D we only know that SOME customers left because they had to wait for several minutes. This doesn't mean that MOST consider wait time an important factor. Thus, incorrect.
E presents an alternate plan to the information provided. In this sense it is similar to A. E isn't supportable either. We just know that wait times on average are up, but we don't have any information to understand whether wait times increase at peak periods or whether they have increased across the board in general. Either way, wait times would increase, but if wait times increased across the board in general then it wouldn't make any sense to put staff on at specific times. We only have an average.

As per passage, we donot know if wages of each cashier were same. Thus it cannot be 100% sure.
Let sat each cashier has different wages and per hrly wages can be better metric to represent cost to Buls eye store for calculation per say.
Then any reduction in number of cashier will reduce cost to the Buls eye store.

As per the theory of must be true / conclusion / inference type question given by nightblade354 based on powerscore and Mahanttan guide (apologies if there is any other source then mentioned) :
"Avoid Answers that are Exaggerated answers, Partially true answers, answers with New Information, Reverse wording in the Answer"

Note : "answers with New Information" is considered wrong. Though cost cutting is mentioned, linking it with profitability seems to be an outside / new information, concept which has no refeence in the passage.

Basis this I eliminated B.

Is there something that I misunderstood in the concept?

Profit is defined as revenue minus cost (= the only thing you have to know about business for this test, incidentally). So, we definitely know that either revenue or cost is linked to profitability. This isn't an 'outside fact'; this is the basic definition of profit.

People are shopping but waiting in line to pay, and consequentially leaving the shop.
So people are coming to shop

Is it a right reason to eliminate D?

That's one way of looking at (D), but really, we can eliminate (D) because we don't have any information indicating that the increased wait time has influenced people's choice of where to shop.

There may be fewer customers than before in the shop, but information along those lines is not provided.