Over the last few years, the demand for breakfast cereals produced by

Question

Over the last few years, the demand for breakfast cereals produced by Foods, Inc. has increased significantly. According to the experts, this increase is accounted for by the fact that the market for breakfast cereals is going through a phase of rapid growth, which is predicted to continue for the next several years. In response to this forecast, Foods, Inc. is thinking about retooling its currently idle granola bar plant to make breakfast cereals in order to increase its revenues.

Which of the following would be most useful for Foods, Inc. to know in evaluating the plan it is considering?

A) Whether the increased demand for breakfast cereals, if met, is likely to lead to an increase in the demand for dairy products.

B) Whether demand for other breakfast foods is also expected to increase.

C) Whether demand for granola bars is projected to increase in the near future.

D) Whether equipment used for producing granola bars is suitable for making breakfast cereals.

E) Whether per capita consumption of breakfast cereals is expected to grow in the next several years.

Source: AdmitMaster online platform (GoGMAT)

chetan2u · Answer

Hi..

the PARA generally talks of maximizing PROFIT by shifting from A to B as  A is not in use and B is finding demand

without even looking at the choices, you should have the question what if there is some season favorable to A round the corner - won't it go against the VERY reason we are planning to shift.
 This very reason is mentioned in C hence our answer

but lets see how we can eliminate other choices

A) Whether the increased demand for breakfast cereals, if met, is likely to lead to an increase in the demand for dairy products.
 Plan is to retool from G to B, so OUT of scope

B) Whether demand for other breakfast foods is also expected to increase.
 Again Plan is to retool from G to B, so OUT of scope

C) Whether demand for granola bars is projected to increase in the near future.
 Correct. what if G is to increase in future, there is no use of retooling as we will have to again reconvert to meet demand of G

D) Whether equipment used for producing granola bars is suitable for making breakfast cereals.
  TRAP .. one can fall for it..
but we are already retooling the plant, so the plan is not dependent on this

E) Whether per capita consumption of breakfast cereals is expected to grow in the next several years.
 We are talking of present, so out of context

C

Hadrienlbb · Answer

Amazing answer. I actually did fall for D the first time. Love your explanation better than the one I originally got. Thanks!

VISHWAS1990 · Answer

Dear chetan,
For option C:
Suppose if the profit margin/revenue of breakfast cereals is much higher than the profit margin/revenue of granula bar,then even if granula bar demand increases in future there is no need to reconvert the existing plant.

You are assuming that if granula bar demand increases ,it will fetch higher profit /revenues than breakfast cereals.But in the argument there is no relation stated between the revenues.

According to me no ans choice is proper.

chetan2u · Answer

Hi.. now you are assuming that the profit will be high..

remember that the Q is very clear in asking - " which of the following is the most useful in asking". In end of it, you may be correct that profit is so high that the reconvert will not be required there can be many ifs and buts .. what if the demand of x goes down? what if there is a drought and the market for everything collapses Hope it helps

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Over the last few years, the demand for breakfast cereals produced by

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