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The Maxilux car company's design for its new luxury model, the Max 100

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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 09 Nov 2015, 12:35
Isnt A worthy enough for discussion
Infact I found A more closer answer than B

And D on the other side talks about generic terms tires can be part of the worn out stuff

Experts please share your views on this
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 05 Apr 2016, 21:19
rjacobsMGMAT wrote:
(D). Profit = Revenue - Cost. The premises show that revenue from Maxilux will equal cost. So to strengthen the argument, we need additional revenue from elsewhere. (B) is close because it generates additional revenue, but that revenue is also from Maxilux so the revenue will most likely not exceed the cost here either. (D) is the only answer choice that adds the kind of outside revenue stream we want.



Can someone please state the conclusion and premise and identify whether the option D fills the gap between conclusion and premise as this strengthen the argument?
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 08 Aug 2016, 11:27
Hi ,

I find choice D as less of a strengthener as we are not given whether Rubco will sell the replacement tyres at a higher price directly to consumers. If they sell the replacements to Maxilux directly , the profit will be approx zero as stated earlier.
Choice C in my opinion will cut down the Logistical and Transportation cost and help in increasing profits. Thus it makes the Rubco executives' claim more believable.

Experts , Any thoughts on this ?
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 16 Aug 2016, 18:51
russ9 wrote:
Can someone shed some light on why C is wrong?

If the facilities are located closer, doesn't that mean that it's reduced cost and therefore higher profits?


Because the analyst said that M's purchase price is just cover cost (which is the cost of the materials to be used to make the tires). So R will be unprofitable if it incurs any other cost. If the facilities are located close, R still need transportation cost anyhow. (C) makes R "less unprofitable", it does not make R "become profitable".
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 25 Sep 2017, 09:58
Thanks.. But why not A.. We have no clue about a spare tire, perhaps the spare tire causes additional revenue stream?

rjacobsMGMAT wrote:
(D). Profit = Revenue - Cost. The premises show that revenue from Maxilux will equal cost. So to strengthen the argument, we need additional revenue from elsewhere. (B) is close because it generates additional revenue, but that revenue is also from Maxilux so the revenue will most likely not exceed the cost here either. (D) is the only answer choice that adds the kind of outside revenue stream we want.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 07 Jan 2018, 04:29
Hi GMATNinja GMATNinjaTwo


Can you suggest if (A) weakens the claim:
If Rubco had to supply additional spare tires their profits will eventually get down.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 08 Jan 2018, 23:32
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adkikani wrote:
Hi GMATNinja GMATNinjaTwo


Can you suggest if (A) weakens the claim:
If Rubco had to supply additional spare tires their profits will eventually get down.

Quote:
(A) In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.

Based on the wording of choice (A) ("In any Maxilux model, the spare tire...), I think it's safe to infer that the model in question comes with a spare tire. It would be a stretch to assume that the bid did NOT include budget for a spare tire and that Rubco now has to go out and supply additional tires. In other words, if the model needed 5 tires (including a spare), the contract would have included 5 tires.

So choice (A) doesn't really impact the claim. We would have to make some big assumptions to conclude that this is a weakener.

I hope that helps!
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 13 Apr 2018, 07:34
The Maxilux car company's design for its new luxury model, the Max 100, included a special design for the tires that was intended to complement the model's image. The winning bid for supplying these tires was submitted by Rubco. Analysts concluded that the bid would only just cover Rubco's costs on the tires, but Rubco executives claim that winning the bid will actually make a profit for the company.

Which of the following, if true, most strongly justifies the claim made by Rubco's executives?

(A) In any Maxilux model, the spare tire is exactly the same make and model as the tires that are mounted on the wheels.

(B) Rubco holds exclusive contracts to supply Maxilux with the tires for a number of other models made by Maxilux.

(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.

(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.

(E) When Maxilux awarded the tire contract to Rubco, the only criterion on which Rubco's bid was clearly ahead of its competitors' bids was price.

This is a strengthen the argument question.
Like weaken, strengthen questions also require us to isolate the conclusion. As we will be looking for the answer that makes our belief stronger on the premise-conclusion relationship such as analogies, survey, reports, statistical data etc.
Protect the missing information
a) by keeping any option that fills the gap
b) by eliminating the answer that attacks the missing information

Between B and D, I feel B won't help to justify the conclusion, which says "winning the bid will actually make a profit for the company". This option talks about the contracts to supply Maxilux with the tires for a number of other models made by Maxilux. However, the conclusion is talking about this bid will generate profit.

D does the job. This helps me believe that if I need to replace a worn part of it, I need to invariably replace it with a part of exactly the same make and type. That means I cannot go anywhere else but Rubco.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 13 Jun 2018, 03:29
rjacobsMGMAT wrote:
(D). Profit = Revenue - Cost. The premises show that revenue from Maxilux will equal cost. So to strengthen the argument, we need additional revenue from elsewhere. (B) is close because it generates additional revenue, but that revenue is also from Maxilux so the revenue will most likely not exceed the cost here either. (D) is the only answer choice that adds the kind of outside revenue stream we want.



Also to add in the Option B, it says for other models but the Argument talks about profit from Max 100 only.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 10 Sep 2018, 06:46
I understand that the answer is D which i do feel that D is the best answer out of the 4. However, i do find D rather confusing as well. The reason being, manufacturing the tire only allows the company to cover cost therefore profit =0. Now, how can we assume that people will buy from the manufacturer instead of the car company? We do not know that, also if car company is buying at cost, wouldn't they sell at a minimum profit as well, making the manufacturer unable to sell it for a profit? In normal circumstances, usually companies will prevent manufacturer to sell the item they manufacture.

While i do find D the best answer, i am really not convince it should be the answer. can some one please advise me.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 09 Feb 2019, 07:09
(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.

I am not sure why C is incorrect. To me it seems that if the facilities are near to each other then Rubco will be able to save on transportation.

(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.

Now with regards to D, I thought that even if there are people who purchase the worn out part, they may not be enough in numbers to cover the cost of the tyre...

Can someone help me on this please?
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 21 Feb 2019, 10:36
nausherwan wrote:
(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.

I am not sure why C is incorrect. To me it seems that if the facilities are near to each other then Rubco will be able to save on transportation.

(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.

Now with regards to D, I thought that even if there are people who purchase the worn out part, they may not be enough in numbers to cover the cost of the tyre...

Can someone help me on this please?

To answer this question, we need to justify the Rubco executives' claim that "winning the bid will actually make a profit for the company," despite the analysts' conclusion that "the bid would only just cover Rubco's costs on the tires."

Take another look at answer choice (C):
Quote:
(C) The production facilities for the Max 100 and those for the tires to be supplied by Rubco are located very near each other.

This answer choice seems to imply that the transportation costs for Rubco to get the tires to the Max 100 production facility would be low. The problem is, we don't know if the analysts already factored this into their conclusion. Without more information on what "costs" the analysts did or did not take into account when reaching their conclusion, we cannot assume that the distance between the two production facilities would change their analysis in any way. Thus, we cannot assume that Rubco would actually make a profit as claimed by the company executives. (C) is out.

In your analysis of answer choice (D), you say "even if there are people who purchase the worn out part, they may not be enough in numbers to cover the cost of the tyre." But we already know that the bid would "just cover Rubco's costs." We have no reason to believe that Rubco is losing money on this bid. The conclusion we're trying to explain is that Rubco will make a profit as a result of winning the bid.

Now look again at (D):
Quote:
(D) When people who have purchased a carefully designed luxury automobile need to replace a worn part of it, they almost invariably replace it with a part of exactly the same make and type.

This choice implies that in addition to providing tires to Maxilux at the price in their bid, Rubco can expect to sell replacement tires to people who purchase the Max 100. These replacement tires are not part of the bid, so they can be sold at a different price. That's why Rubco could make a profit by winning the bid, even if analysts are correct that the company will only just cover their costs in supplying the tires to Maxilux. (D) is correct.

I hope that helps!
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 16 Apr 2019, 19:27
i feel next to option d , option a is kindof close contender, with an assumption bid doesnt cover the cost of spare. then it will add extra revenue . how come option B i dont know it is easy to eliminate as it dont talk about the bid in question..

anybody sharing same thought?
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 16 Apr 2019, 21:02
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Cheryn wrote:
i feel next to option d , option a is kindof close contender, with an assumption bid doesnt cover the cost of spare. then it will add extra revenue . how come option B i dont know it is easy to eliminate as it dont talk about the bid in question..

anybody sharing same thought?
But how good is that assumption? We would expect the spare tire to be part of the contract between Maxilux and Rubco. Also, the conclusion is about profits, not revenue.

Your reasoning for B is correct: option B doesn't show us how winning this bid will lead to a profit for Rubco. It just says that there are other contracts that the company has with Maxilux.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 20 Aug 2019, 22:35
I am thinking against the option D for following reason :
Even if you sell the same tire to more channels the profit contribution on one tyre cost wont change e.g. if you are selling at 5000 INR and you incur a cost of 5000 INR, no matter how much volume you increase you wont make profit ,Until unless you assume that several cost heads would come down because volume is increasing, now this would be an assumption which is a strict No No from what i have understood
While For option E, SInce they have bid only for price and not for specification, they may vary specification to alter cost and hence become profitable.
Need your opinion on this.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 01 Sep 2019, 08:34
avneetash@gmail.com wrote:
I am thinking against the option D for following reason :
Even if you sell the same tire to more channels the profit contribution on one tyre cost wont change e.g. if you are selling at 5000 INR and you incur a cost of 5000 INR, no matter how much volume you increase you wont make profit ,Until unless you assume that several cost heads would come down because volume is increasing, now this would be an assumption which is a strict No No from what i have understood
While For option E, SInce they have bid only for price and not for specification, they may vary specification to alter cost and hence become profitable.
Need your opinion on this.

For an explanation of why (D) is the correct answer, please see this post and let me know you have further questions!

Take another look at the exact wording of (E):
Quote:
(E) When Maxilux awarded the tire contract to Rubco, the only criterion on which Rubco's bid was clearly ahead of its competitors' bids was price.

(E) doesn't tell us that the bid only included price -- it just tells us that Rubco's bid was "ahead of its competitors' bids" on price, but not clearly ahead on other criteria. So we can't assume that Rubco can just change the specifications at will in order to make a profit.

(E) doesn't support the claim that Rubco will make a profit by winning the bid, so it is not the correct answer.

I hope that helps!
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The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 01 Sep 2019, 11:02
Hi

I Agree that B is incorrect choice. the exclusive contracts could be already existing.

But, I don't agree with D as well. Cause It never said that Rubco caters to Customers and even if Rubco does cater, it does not answer whether customers are inclined to buy from Rubco as they can get the same at a cheaper price from Maxilux.

There are too many assumptions to make in this choice.

GMATNinja, daagh, Please help.
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Re: The Maxilux car company's design for its new luxury model, the Max 100  [#permalink]

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New post 19 Sep 2019, 15:20
Harsh9676 wrote:
Hi

I Agree that B is incorrect choice. the exclusive contracts could be already existing.

But, I don't agree with D as well. Cause It never said that Rubco caters to Customers and even if Rubco does cater, it does not answer whether customers are inclined to buy from Rubco as they can get the same at a cheaper price from Maxilux.

There are too many assumptions to make in this choice.

Remember that the correct answer does not have to prove the argument. It simply has to be the choice that most strongly justifies the claim made by Rubco's executives.

If true, choice (D) tells us very explicitly that consumers of a car like the Max 100 will almost invariably replace a worn part with a part of the exact same make and type. This implies that Max 100 owners will replace worn Rubco Max 100 tires with new Rubco Max 100 tires. This effectively increases the expected number of tire sales per Max 100 beyond what is supplied to initially manufacture the car.

You ask whether customers could obtain these tires from Rubco or from Maxilux. But we already know that Rubco is the manufacturer of the tires. So in either instance, Rubco can expect to make a profit, almost invariably, whenever a tire on the Max 100 wears out and needs to be replaced. Either Rubco supplies to Maxilux and earns on that wholesale, or Rubco sells directly to consumers and earns on the retail sale.

Yes, there is some logical wiggle room here because we don't have 100% confirmation of how replacement tire sales fit into the bid and its long-term conditions. We also don't know the precise rate of replacement, and we don't know what Rubco considers to be a fantastic profit margin vs. a sufficient profit margin.

But we don't need any fo those confirmations, because we know from the prompt that Rubco sells the tires, and (D) confirms that people will almost invariably continue to buy them.

I hope this helps!
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Re: The Maxilux car company's design for its new luxury model, the Max 100   [#permalink] 19 Sep 2019, 15:20

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