A large pet-food manufacturer currently uses pork meal as the main

Question

A large pet-food manufacturer currently uses pork meal as the main protein-supplying ingredient in its most popular dog food. In order to cut costs, the manufacturer plans to switch from pork meal to a mixture of equal amounts of this pork meal and of chicken meal, which currently costs 20 percent less per pound than pork meal.

Which of the following, if true, casts the most doubt on the viability of the pet-food manufacturer’s plan?

(A) Dogs are proportionately more likely to experience allergic reactions from eating chicken meal than from eating pork meal.

(B) Because its market segment is rapidly becoming more competitive, the manufacturer will almost certainly have to lower the price per pound of its products to retain its market share.

(C) Chicken meal of the grade used for pet foods has a shorter shelf life than does the comparable grade of pork meal.

(D) If the proposed change is implemented, the resulting change in overall demand would cause the wholesale market price of chicken meal to rise.

(E) Chicken meal is more fuel-efficient for the manufacturer to process into pet food than is pork meal.

V26-27

RonPurewal · Accepted Answer

Official Explanation:

First, we need to understand the specific point of the manufacturer’s plan.

This is stated at the beginning of the second sentence—to   cut costs  .

Therefore, to CAST DOUBT on the viability of this plan, we need a   reason why manufacturing costs may NOT decrease   from their current level if the change from all-pork to half-pork, half-chicken is implemented.

A. An increase in allergic reactions could conceivably affect the manufacturer’s market share, but neither such reactions nor anything else experienced by the end-user could possibly affect manufacturing costs. This consideration is irrelevant.

B. If market developments force the manufacturer to start selling at a lower unit price, then its   revenues   per unit (per pound)—but not its costs—will go down. This consideration is irrelevant to the cost side of the balance sheet.

C. No reason is given to suspect that shelf-life issues might affect manufacturing costs, so this consideration is irrelevant.

D. The basis of the manufacturer’s planning is the lower   current   cost of chicken meal. If the change in demand inherent in its plan will push the wholesale price of chicken meal up towards the current price of pork meal, then that effect will erode the manufacturer’s anticipated cost savings.

E. If this statement is true, then chicken meal will be not only cheaper for the manufacturer to purchase at wholesale, but also cheaper to process into its final product! This consideration therefore gives a   further   reason why the manufacturer’s plan should lower costs—i.e., it strengthens the argument. That’s the opposite of what we want.

Answer: D.

Dereno · Answer

A large pet food manufacturer currently uses pork as major protein supplying ingredient, and this has been the popular food for dogs.

In order  to cut costs , the manufacturer plans to come up with an idea of mixing equal portion of chicken and pork, so that the cost is 20% less.

Let’s take the 100% pork meal is $ 100 per pound.

But, the 50% Pork and 50% Chicken mix is $80 ( 20% lesser) per pound.

We need to narrow down to an option -  which casts the most doubt on the viability of the pet-food manufacturer’s plan .

(A) Dogs are proportionately more likely to experience allergic reactions from eating chicken meal than from eating pork meal.

Dogs experiencing allergic reaction to a particular food meal, can cause the product sale and profit to decline. Does it affect the cost cut plan to fail. Yeah, the product is a failure for most dogs, is this failure related to cost cutting plans. No. Hence, Wrong. If the question is about product failure as a whole, then this option seems a strong contender.

(B) Because its market segment is rapidly becoming more competitive, the manufacturer will almost certainly have to lower the price per pound of its products to retain its market share.

This is a perfect market scenario, as more players jump to capture a market. To maintain or hold a considerable market share, they need to offer products at more affordable or lesser price points. This option doesn’t speak about the cost cut plan and its implications. Hence, wrong.

(C) Chicken meal of the grade used for pet foods has a shorter shelf life than does the comparable grade of pork meal.

If that’s the case, the product can be sold mentioning the new shelf life. Is the wastage high enough to make the cost cutting done a failure? This is an ambiguous situation, as the outcome can swing either way. Thus we cannot certainly say that the shelf life had increased more wastage that the cost reduced has been eroded. Hence, Wrong.

(D) If the proposed change is implemented, the resulting change in overall demand would cause the wholesale market price of chicken meal to rise.

If post implementation of the plan, the manufacturer consumes more chicken, making the demand for chicken to shoot up, this demand pull will eventually trigger the price point to move higher. As the chicken price rises, the gap between the price of chicken and price of pork narrows down. This erodes the manufacturer plan of cost cutting measures. Hence, correct answer.

(E) Chicken meal is more fuel-efficient for the manufacturer to process into pet food than is pork meal.

If chicken meal is more fuel efficient to process for the manufacturer, which means the cost of production is less compared to a pork meal. And , the cost saving from this process has been high. Hence, a strenghtener, not a weakening statement. Hence, wrong.

Option D

Navdeep2000 · Answer

As per the required, we have to cast a doubt stating something on the lines that even after the planned action of the manufacturer, cost cutting wouldn't be possible.

(A) Dogs are proportionately more likely to experience allergic reactions from eating chicken meal than from eating pork meal.
 This is related to the after sales effect of the product. However, we are required to stick to the manufacturing cost of it, which this option does not talk about. Rejected.

(B) Because its market segment is rapidly becoming more competitive, the manufacturer will almost certainly have to lower the price per pound of its products to retain its market share. 
 Lowering the price of the product doesn't change the fact that the manufacturer's plan to cut cost won't be successful. Rejected.

(C) Chicken meal of the grade used for pet foods has a shorter shelf life than does the comparable grade of pork meal. 
 This is a general statement given here. However, the para doesn't concern around this and nor is it related to the cost to the manufacturer. Hence, Rejected.

(D) If the proposed change is implemented, the resulting change in overall demand would cause the wholesale market price of chicken meal to rise. 
 Exactly. So, even if the manufacturer tried to replace 50% of pork with chicken meal to lower cost considering chicken is cheaper than the other, it will eventually increase the wholesale price of the chicken that the manufacturer currently buys. This way the manufacturer will have to spend more on the chicken, which was only brought into the plan in the first place due to its low price. This will lead to a failure of the cost cutting.  Option D

(E) Chicken meal is more fuel-efficient for the manufacturer to process into pet food than is pork meal. 
 If the chicken meal is more fuel-efficient, it gives more of a reason that the manufacture's plan of cost cutting will be successful. Therefore, this statement strengthens the argument. However, we are required to look for a weakener. Rejected.

A large pet-food manufacturer currently uses pork meal as the main

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