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Conclusion: Lowering the staffing by 250 employees would not decrease the service.

A. He confuses the definitions of absent and unemployed.

Out of scope : This doesn't throw light on the conclusion.

B. He fails to justify an assumed change in absenteeism.

I think this the best option. Lets say after the staff is lowered the number of absentees increase. The delivery rates may get affected.

C. He takes for granted that every employee’s level of service is identical.

Distortion : I think this is pretty close. However, even if the service level is not identical the employees are still maintaining on-time delivery rates. Also, we how the lowering of staff would be done is not given. May be the employees with bad service record be let go.

D. He overlooks the fact that some absences are more justified than are others.

Out of scope : This doesn't throw light on the conclusion.

E. He ignores the possibility that absences may be unevenly distributed at the company.

Out of scope : How the layoff would be done is not mentioned, hence we cannot conclude that it would be a homogeneous decrease across facilities.

After a lot of thought between B & C ...

IMO - B
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