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# QOTD: Tanco, a leather manufacturer, uses large quantities

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QOTD: Tanco, a leather manufacturer, uses large quantities  [#permalink]

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07 Mar 2018, 09:37
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55% (hard)

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63% (01:41) correct 37% (01:56) wrong based on 460 sessions

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Verbal Question of The Day: Day 238: Critical Reasoning

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Tanco, a leather manufacturer, uses large quantities of common salt to preserve animal hides. New environmental regulations have significantly increased the cost of disposing of salt water that results from this use, and, in consequence, Tanco is considering a plan to use potassium chloride in place of common salt. Research has shown that Tanco could reprocess the by-product of potassium chloride use to yield a crop fertilizer, leaving a relatively small volume of waste for disposal.

In determining the impact on company profits of using potassium chloride in place of common salt, it would be important for Tanco to research all of the following EXCEPT:

(A) What difference, if any, is there between the cost of the common salt needed to preserve a given quantity of animal hides and the cost of the potassium chloride needed to preserve the same quantity of hides?

(B) To what extent is the equipment involved in preserving animal hides using common salt suitable for preserving animal hides using potassium chloride?

(C) What environmental regulations, if any, constrain the disposal of the waste generated in reprocessing the by-product of potassium chloride?

(D) How closely does leather that results when common salt is used to preserve hides resemble that which results when potassium chloride is used?

(E) Are the chemical properties that make potassium chloride an effective means for preserving animal hides the same as those that make common salt an effective means for doing so?

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Re: QOTD: Tanco, a leather manufacturer, uses large quantities  [#permalink]

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07 Mar 2018, 09:39
3
Tanco is considering a plan to use potassium chloride in place of common salt. The answer choices consist of questions that may or may not be important to research in determining the impact of that plan on Tanco's profits. Before diving into the answer choices, let's make sure we understand the plan and the rationale behind it:

• Tanco uses large quantities of common salt to preserve animal hides.
• New environmental regulations have significantly increased the cost of disposing of salt water that results from preserving animal hides with salt. So if Tanco does not change their processes, their costs will increase significantly.
• In order to avoid these increased costs, Tanco is considering a plan to use potassium chloride in place of common salt. That way Tanco will avoid the costs of disposing of salt water.
• But what about the disposal of the waste from potassium chloride use? Well, research has shown that Tanco could reprocess the by-product (i.e. waste product) of potassium chloride use to yield a crop fertilizer.
• Recycling the by-product to make crop fertilizer will leave only a relatively small volume of waste for disposal.

Sounds great! Instead of paying the increased costs of salt water disposal, Tanco can switch to potassium chloride and recycle most of the by-products. In that case, Tanco will only have to dispose of a relatively small quantity of waste.

But will implementing this plan affect company profits? Any answer choice that addresses a possible impact to Tanco's profits should be eliminated.

Quote:
A. What difference, if any, is there between the cost of the common salt needed to preserve a given quantity of animal hides and the cost of the potassium chloride needed to preserve the same quantity of hides?

We know that Tanco's plan will allow the company to avoid the increased costs of salt water disposal. But will this plan increase costs in other ways? What if the amount of potassium chloride needed to preserve some quantity of hides costs much more than the amount of common salt needed to preserve the same quantity of hides?

Sure, Tanco will save on disposal costs, but the company will have to spend more on potassium chloride than it spent on common salt. If that cost increase is large enough, then the plan to switch to potassium chloride could actually have a negative effect on profits. Tanco would certainly want to research these amounts in determining the impact of the plan on company profits, so eliminate (A).

Quote:
B. To what extent is the equipment involved in preserving animal hides using common salt suitable for preserving animal hides using potassium chloride?

If some or all of the equipment involved when using common salt is NOT suitable when using potassium chloride, then Tanco may have to upgrade or replace that equipment. If these equipment changes are small, they may not be very costly. But Tanco might have to invest a substantial amount of money in equipment modifications before switching to potassium chloride. Depending on the amounts, this could significantly affect Tanco's profits.

In determine the impact of the plan on company profits, Tanco would want to research equipment compatibility. Eliminate (B).

Quote:
C. What environmental regulations, if any, constrain the disposal of the waste generated in reprocessing the by-product of potassium chloride?

Even if the potassium chloride by-products are reprocessed to yield a crop fertilizer, Tanco will have to dispose of a relatively small quantity of waste. The quantity of waste may be small, but how expensive is it to dispose of that waste? What if the environmental regulations on this waste make its disposal significantly expensive? How would those disposal costs compare to the increased salt water disposal costs?

Depending on the exact amounts, disposal of the small quantity of potassium chloride waste might be more expensive than the disposal of salt water, even after the new regulations are implemented. Tanco would certainly want to determine whether the company will face other regulations if the plan is implemented. This question would be important to research in determining the effect of the plan on Tanco's profits. Eliminate (C).

Quote:
D. How closely does leather that results when common salt is used to preserve hides resemble that which results when potassium chloride is used?

Even if using potassium chloride is the cheaper option, will it affect the characteristics of the leather? What if using potassium chloride results in leather that is significantly different than the leather produced using common salt? Such differences, if any, could affect the demand for and/or price of Tanco's products. This could certainly affect Tanco's profits. Choice (D) presents a question that is important to research, so eliminate (D).

Quote:
E. Are the chemical properties that make potassium chloride an effective means for preserving animal hides the same as those that make common salt an effective means for doing so?

As long as both substances have the same effect on the hides, the mechanisms by which they operate are not important. Perhaps the chemical properties that make potassium chloride an effective means for preserving animal hides are significantly different than the chemical properties that make common salt an effective means for preserving animal hides.

So what? Are hides preserved using potassium chloride different than hides preserved using common salt? Knowing that the properties are different doesn't tell us whether the hides themselves will be different. Researching this question alone would not reveal potential differences in the hides or the resulting leathers.

Simply knowing whether the chemical properties are the same or different would not tell us anything about profits. Thus, this research is not important in determining the impact of the plan on company profits.

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Re: QOTD: Tanco, a leather manufacturer, uses large quantities  [#permalink]

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08 Mar 2018, 00:06
I would go with option C, because "what are the environmental regulations"...does not affect the profit margins of the company, rest all will affect in one or the other way.

A. Talks about costs (will affect)

B. Equipments also affect as either it may save cost or if not suitable, equipments purchase cost would be involved.

C. "What environmental regulations constrain the disposal".... does not affect the profits in any way.

D. This talks about the quality and similarity of the leather(product), which is an important and contributing factor in profits.

E. Effective preserving is again related to quality of leather.

Thus, I would go with C.

Plzz correct me if I am wrong.

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Re: QOTD: Tanco, a leather manufacturer, uses large quantities  [#permalink]

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08 Mar 2018, 06:07
I believe it's E since

A. Cost vs. Cost
B. Cost
C. Potential Cost or regulatory issue that could stop them from proceeding with the alternate potassium treatment.
D. Quality which will in turn affect sales, which trickle down to profits (since we are not talking about profit margins).
E. We're talking about the chemical properties in common that make the different preservation methods effective. This really shouldn't matter as it won't affect the quality & quantity of the materials used or the leather sold.

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Re: QOTD: Tanco, a leather manufacturer, uses large quantities  [#permalink]

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08 Mar 2018, 06:34
We need to select the option which doesn't need to be evaluated in order to consider the impact on the profits of using NaCl vs KCl.
Choice E talks about the chemical properties of NaCl and KCl. Hence, the correct answer is E.
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Re: QOTD: Tanco, a leather manufacturer, uses large quantities  [#permalink]

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08 Mar 2018, 06:51
GOAL: eliminate statements that would directly link with company's profits(as written in question stem)

PROFITS=REVENUE-(CAPITAL INVESTMENT+OPERATING COST + REPROCESSING COST)

A. What difference, if any, is there between the cost of the common salt needed to preserve a given quantity of animal
hides and the cost of the potassium chloride needed to preserve the same quantity of hides?
operating cost is involved so obviously it will affect the profits
B. To what extent is the equipment involved in preserving animal hides using common salt suitable for preserving animal hides using potassium chloride?
Capital investment is involved . so obviously it will affect profits
C. What environmental regulations, if any, constrain the disposal of the waste generated in reprocessing the by-product of potassium chloride?
cost of reprocessing . So profits would take a toll
D. How closely does leather that results when common salt is used to preserve hides resemble that which results when potassium chloride is used?
Quality of material produced which is linked to revenues . So profit would take a toll
E. Are the chemical properties that make potassium chloride an effective means for preserving animal hides the same as those that make common salt an effective means for doing so?
chemical properties of the salt we dont need it .
OA: E
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Re: QOTD: Tanco, a leather manufacturer, uses large quantities  [#permalink]

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10 Mar 2018, 07:39
+1 for option E. My take :

Choose an option that doesn't have any impact on profitability of Tanco. Only E fits the bill. All other options have some or the other bearing on profitability of Tanco.
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Re: QOTD: Tanco, a leather manufacturer, uses large quantities  [#permalink]

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10 Mar 2018, 07:48
E.

A. What difference, if any, is there between the cost of the common salt needed to preserve a given quantity of animal hides and the cost of the potassium chloride needed to preserve the same quantity of hides?
Incorrect. Has an obvious effect on the profitability of Tanco.

B. To what extent is the equipment involved in preserving animal hides using common salt suitable for preserving animal hides using potassium chloride?
Incorrect. If we can use the same equipment with potassium chloride as it was being used for common salt, it reduces their costs.

C. What environmental regulations, if any, constrain the disposal of the waste generated in reprocessing the by-product of potassium chloride?
Incorrect. If there are any environmental regulations that would affect the disposal, it might make it more costly for them to dump the potassium chloride, e.g. if there is a policy on very low amounts being dumped, then it increases their costs.

D. How closely does leather that results when common salt is used to preserve hides resemble that which results when potassium chloride is used?
Incorrect. If the consumer can notice the difference and does not like it, then it'll mean reduced revenues and so less profitability.

E. Are the chemical properties that make potassium chloride an effective means for preserving animal hides the same as those that make common salt an effective means for doing so?
Correct. We don't care about the chemical properties. We only care if it does the job.
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Re: QOTD: Tanco, a leather manufacturer, uses large quantities  [#permalink]

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04 Jun 2018, 21:04
SonalSinha803 wrote:
I would go with option C, because "what are the environmental regulations"...does not affect the profit margins of the company, rest all will affect in one or the other way.

A. Talks about costs (will affect)

B. Equipments also affect as either it may save cost or if not suitable, equipments purchase cost would be involved.

C. "What environmental regulations constrain the disposal".... does not affect the profits in any way.

D. This talks about the quality and similarity of the leather(product), which is an important and contributing factor in profits.

E. Effective preserving is again related to quality of leather.

Thus, I would go with C.

Plzz correct me if I am wrong.

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It is very important for Tanco to research Option C. Why is the company even considering replacing potassium chloride in place of common salt. Because of regulations, right? Option C says "What environmental regulations, if any, constrain the disposal of the waste generated in reprocessing the by-product of potassium chloride?".

So imagine, "environmental regulations are not in favour of disposal of the waste generated in reprocessing the by-product of potassium chloride?". This would mean that the company cannot replace potassium chloride in place of common salt. It will have to look for another alternative then.

I hope this explanation helps you. There are other posts in this thread which explain why "E" is the correct answer for this question.

Please revert in case if you need more clarification!! All the best!!
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Re: QOTD: Tanco, a leather manufacturer, uses large quantities &nbs [#permalink] 04 Jun 2018, 21:04
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