The government’s design for the new cross-state bridge

Question

The government’s design for the new cross-state bridge, the Plexico Bridge, makes use of a special reflective coating that is intended to make the bridge shine like a hologram from miles away. The winning bid for supplying the special paint coating was submitted by Sherwin & Co. Analysts concluded that the bid would only just cover Sherwin & Co's costs on the paint, but Sherwin & Co 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 Sherwin & Co’s executives?
(A)In any government authorized model, the specialized coating on the bridge structures is exactly the same make and model as the coating used on the ramp structure going onto the bridge.

(B)Sherwin & Co holds exclusive contracts to supply the government with the coating for a number of other bridges authorized by the government.

(C)The manufacturing facilities for the Plexico Bridge components and those for the specialized coating to be supplied by Sherwin & Co are located very near each other.

(D)When bridge owners need to repaint a worn-out bridge due to time and corrosion, they almost invariably repaint it with a coating of exactly the same make and type from the same supplier.

(E)When the government awarded the coating contract to Sherwin & Co, the only criterion on which Sherwin & Co’s bid was clearly ahead of its competitors' bids was price.

Carcass · Answer

Instead to give an answer , pretty straight. I would like to ask the other way around: what is your concern about this question ??

SaudKhan · Answer

y not C ??
and can you please explain y the OA is D ???

bb61 · Answer

Analysts concluded that the bid would  only just cover Sherwin & Co's costs  on the paint, but Sherwin & Co executives claim that winning the bid  will actually make a profit  for the company.
the correct answer choice must reconcile this paradox and let these two facts coexist.

(C)The manufacturing facilities for the Plexico Bridge components and those for the specialized coating to be supplied by Sherwin & Co are located very near each other.
this fact that the manufacturing facilities of the Plexico Bridge components and those for the specialized coating are located very near does not explain how they can make profit.
maybe you perceived this fact can help in lowering such sort of costs as transportation. but it does not explain how this proximity location can make profit!

but in option D)When bridge owners need to repaint a worn-out bridge due to time and corrosion, they almost invariably repaint it with a coating of exactly the same make and type from the same supplier.
it says that maybe on the first round of painting what they earn would only just cover Sherwin & Co's costs , but on the next time when they want to renew coating they will actually make a profit.

mshrek · Answer

Hi,
Though i perceive D to be better than other options I still have my concerns for this option. Lt us take an e.g
Sherwin & co produces 1bucket paint @ 100$ (selling price). Let the cost to produce 1bucket of paint = 90$. Let other miscellaneous setup costs add utp 10$. So essentially, the first time the paint is sold there is no profit for sherwin & co ( sp- cp -miscll costs= 100 -90 -10 =0 ). But from next time onwards these miscllaneous setup costs would not be there and therefore Sherwin & co can earn a profit of 100$ - 90$ =10$ everytime . Please tell me whether my understanding is correct or not.

bb61 · Answer

I think you are making an assumption that the company cannot raise its price for the next round. 
but in option D the only limitation is that "they almost invariably repaint it with a coating of exactly the same make and type from the same supplier" but not the second time price. maybe the supplier can charge higher when they know they are the sole provider for their customer.
in this case if you change 100 to 150 then it will make sense.

mshrek · Answer

Yes. That was an assumption I made. Thanks for the clarification. Option D makes more sense to me now

Konstantin1983 · Answer

This question is a "copy" of this one the-maxilux-car-company-s-design-for-its-new-luxury-model-136971.html . Even the answer is D too=))

sony1000 · Answer

Why not A?..they could make up the lost man hours on the bridge by adding them onto the ramp...I am not certain what ramp structure is...

lostin · Answer

A Ramp is part of another road joining the bridge. (Though it is not important to answer the question).

I am not sure what you mean by lost man-hours. All that option A is saying that Ramp will have the same coating as the bridge.
So Company will have some additional road to apply the coating, this information doesn't help to explain company claim.

We can explain the company claim if the company is expecting a long-term sale as result of this contract.

whatsarc · Answer

Can someone please help eliminate B?

DmitryFarberMPrep · Answer

This is a really good example of why it's best to study from official problems. As Konstantin1983 points out above, this problem is copied from a question about tires. The key detail that the rewriter failed to notice is that the new tires involved a "special design" specific to that model. The mention of a "special reflective coating," without the mention of a product-specific design, makes it less clear that the vendor is incurring an up-front design cost that will not appear again as a cost when it comes time for reorders. As written, the problem may seem to require an assumption about these up-front costs, but that is clearly the intent behind the original question: the company breaks even on the initial supply and earns a profit on reorders.

As for B, it doesn't give us any indication that the other contracts are a result of winning this particular bid. Those other contracts may be lucrative (or not), but they don't explain why winning THIS particular contract would be profitable for the vendor.

As for B, it doesn't give us any indication that the other contracts are a result of winning this particular bid. Those other contracts may be lucrative (or not), but they don't explain why winning THIS particular contract would be profitable for the vendor.

The government’s design for the new cross-state bridge

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The government’s design for the new cross-state bridge

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