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The Nowka apparel company's design for its new

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The Nowka apparel company's design for its new  [#permalink]

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New post Updated on: 27 Oct 2015, 21:00
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  25% (medium)

Question Stats:

75% (01:32) correct 25% (01:58) wrong based on 170 sessions

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The Nowka apparel company's design for its new luxury jacket, the Fleecer, included a special design for a synthetic fabric layer that was intended to complement the model's image. The winning bid for supplying this synthetic fabric was submitted by Rainflex. Analysts concluded that the bid would only just cover Rainflex's costs on the fabric, but Rainflex 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 Rainflex's executives?


In any Nowka jacket, the synthetic fabric used in the jacket's hood, if one is present, is of the same make and model as the synthetic fabric of the jacket itself.

Rainflex holds exclusive contracts to supply Nowka with the synthetic fabric for a number of other jackets made by Nowka.

The production facilities for the Fleecer and those for the synthetic fabric to be supplied by Rainflex are located very near each other.

A segment of people who have purchased a carefully designed luxury jacket will replace a worn part of it with a part of exactly the same make and type.

When Nowka awarded the fabric contract to Rainflex, the only criterion on which Rainflex's bid was clearly ahead of its competitors' bids was price.



Source: GMAT FREE -- OA and OE after three responses

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Originally posted by daagh on 25 Oct 2015, 02:34.
Last edited by daagh on 27 Oct 2015, 21:00, edited 1 time in total.
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Re: The Nowka apparel company's design for its new  [#permalink]

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New post 25 Oct 2015, 03:19
D it should be.

One of the best ways to make profits on a closed deal is the 'After sale services'. If you can make sure that once taken the product, the customer will keep coming back to you (or you can make the customer come back to you) you're good to go. Most of them do it nowadays- 'If you take my product once, I will entangle you in such a way that there is no going away ' ;)

A segment of people who have purchased a carefully designed luxury jacket will replace a worn part of it with a part of exactly the same make and type.
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Re: The Nowka apparel company's design for its new  [#permalink]

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New post 25 Oct 2015, 05:31
arhumsid wrote:
D it should be.

One of the best ways to make profits on a closed deal is the 'After sale services'. If you can make sure that once taken the product, the customer will keep coming back to you (or you can make the customer come back to you) you're good to go. Most of them do it nowadays- 'If you take my product once, I will entangle you in such a way that there is no going away ' ;)

A segment of people who have purchased a carefully designed luxury jacket will replace a worn part of it with a part of exactly the same make and type.

With similar reasoning I would choose B. What is your reasoning against B then?
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Re: The Nowka apparel company's design for its new  [#permalink]

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New post 25 Oct 2015, 18:54
MrSobe17 wrote:
arhumsid wrote:
D it should be.

One of the best ways to make profits on a closed deal is the 'After sale services'. If you can make sure that once taken the product, the customer will keep coming back to you (or you can make the customer come back to you) you're good to go. Most of them do it nowadays- 'If you take my product once, I will entangle you in such a way that there is no going away ' ;)

A segment of people who have purchased a carefully designed luxury jacket will replace a worn part of it with a part of exactly the same make and type.

With similar reasoning I would choose B. What is your reasoning against B then?


Actually B is not in line with the reasoning i have presented above (in fact A is closer). In fact its completely irrelevant. Ill tell you how-

B. Rainflex holds exclusive contracts to supply Nowka with the synthetic fabric for a number of other jackets made by Nowka.

We need to strengthen this.. and ONLY this - winning the Fleecer bid will make profit for Rainflex.

We dont really care about the business the two companies do with each other EXCEPT this particular deal- The Fleecer Jacket. If we had an option like this-
"F. Rainflex is the heavyweight of synthetic fabric manufacturing and is going to acquire Nowka soon"
Would that have effected this deal? No! :P

The argument ONLY talks about this deal. The fact that 'Rainflex holds exclusive contracts to supply Nowka...' doesn't affect the Fleecer deal we are concerned with. We are nowhere told that the 'exclusive contracts' talked about in B are dependent upon this deal.

So, in short, their business outside this deal is none of our business :)

D is the only option that is directly connected with the deal at hand.

Does this make sense?
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Re: The Nowka apparel company's design for its new  [#permalink]

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New post 26 Oct 2015, 00:37
I understand what you are saying and thank you kindly for sharing your view.

However, one thing is still bothering me in the answer D. The idea of "after sales services" definitely holds water for this case and is always the best reasoning. But this part "... will replace a worn part of it with a part of exactly the same make and type" confuses me for one and only reason. Namely, it doesn't mention the Fleecer at all. The whole statement does mention the luxury model, but Nowka might have other luxury models, which implies that old customers might not necessarily buy the Fleecer as a replacement - hence no after sales made by Nowka on the Fleecer, hence no additional revenue for Rainflex.

What am I missing?
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Re: The Nowka apparel company's design for its new  [#permalink]

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New post 27 Oct 2015, 20:59
Explanation from GMAT FREE, the source.

Reading the question: as we did in Shipping Skills, we can focus on the opinion first. We might get the idea from the stem, which mentions a "claim," an opinion-charged word, or from the appearance of the word "claim" in the prompt itself. "Rainflex executives claim." We'll work back from there. They want to do some bid even though the bid will just cover costs on the fabric. They evidently think there is some other way to make a profit from the bid. So our correct answer may indicate a way to get profit from the bid even though the dollar amount won in the bid is not high. And the answer choice must somehow discuss profit or have implications for profit to be of basic relevance.

Applying the filter: Choice (A) doesn't lead to profits, since the jacket's size, number of flaps, et cetera, are already included in the (high) cost. Choice (B) is relevant to profit, but it says that Rainflex already has the contracts. If this contract in question were unprofitable but led to later profitable work, that would be a great answer, but that's not what (B) is saying. So (B) is out. Choice (C) reduces a cost for Rainflex, which is consistent with our filter, but that doesn't help it profit when the bid is too low to cover even the fabric cost. Choice (D) is similar to (B): it gives us an ongoing stream of business. If these jackets last forever but need the lining replaced, and Rainflex gets some or all of that, maybe it can profit. Choice (D) is stated in modest terms, but it's relevant and points to a source of profit, whether large or small. Choice (E) is unrelated to whether there is a way for Rainflex to profit from this deal, although it has implications for Rainflex's business overall.

Logical proof: now that we have done a few examples of creating and applying filters to the answer choices, we'll start incorporate the second step of the Critical Reasoning Strategy described at the front of this book: establishing logical proof. One method to establish logical proof of an answer. We can do this for (D). In one case, imagine that buyers of the jacket purchase so many pieces of fabric of these jackets that they are ultimately paying the initial price of the jacket many times over. In that case, the fabric company could indeed make a profit on these jackets. On the other hand, if we negate (D), we are saying there are no further sales of this jacket through replacement. That would weaken the conclusion. We can see that choice (D) describes something that is material (so to speak) to the argument. The correct answer is (D).
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Re: The Nowka apparel company's design for its new  [#permalink]

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New post 23 Nov 2015, 14:46
This is a reworked question from OG 2015 (Q11). One can find an explanation here too.
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Re: The Nowka apparel company's design for its new  [#permalink]

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New post 11 Jul 2018, 21:42
How could there be any profit if the materials are sold at cost? We aren't told if the materials sold AFTER the purchase back to consumers is at cost so how can we conclude there's additional profit?
Re: The Nowka apparel company's design for its new &nbs [#permalink] 11 Jul 2018, 21:42
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