A scrap metal recycling plant processes the excess metals

Question

A scrap metal recycling plant processes the excess metals for three neighboring cities. Companies from the cities deliver their scrap metal to the plant at the beginning of the month, and pick up the processed metal for reuse at the end of the month, paying the plant a fixed rate per ton of metal processed. The monthly income that the plant receives is always sufficient to pay the plant's operating costs, but is inconsistent, especially in economic downturns, when the decrease in manufacturing in neighboring cities decreases the amount of scrap metal companies bring to the plant each month.

Which of the following plans, if instituted, would have the best chance of making the scrap metal plant's monthly income both sufficient to cover the plant's operating costs and consistent?

(A) Merge with another scrap metal recycling plant that provides similar services, so that the two plants can handle twice as many tons of scrap metal per month as the single plant currently does.

(B) Expand the plant's operational base to recycle metals used in construction, a field that tends to suffer during economic downturns.

(C) Replace the fixed rate per ton of metal processed with a uniform monthly fee based on the number of tons of scrap metal companies would typically expect the plant to process.

(D) Increase the fixed rate per ton of scrap metal processed to a level at which the plant can ensure an income stream that covers its operating costs, even during an economic downturn.

(E) Offer the plant's scrap metal processing services to additional neighboring cities, so that a significantly larger number of companies can bring their scrap metal at the current fixed rate per ton of scrap metal processed.

anaik100 · Answer

C
a merging is fine. but income will vary based on vol
b during downturn income will not be there
c plan the income in advance ensures that company can plan accordingly to mantain its operational costs 
d increase the ton will increase the income. but during economic downturn it will reduceb
e but income will vary based on vol

dwivedys · Answer

Just curious to know how you figulred that this question is a sub-600 level question? Could you tell the source please?

nusmavrik · Answer

Straight C. The question is to identify the problem - how to keep the revenue constant so that operational costs can be covered regardless of the economy. C identifies this.

gmatbull · Answer

simply hypothetical -IMO. What do you think?

nusmavrik · Answer

It wasn't so tough. I believe may be sub 600 level or so.

mainhoon · Answer

(C) Replace the fixed rate per ton of metal processed with a uniform monthly fee based on the number of tons of scrap metal companies would typically expect the plant to process.

(D) Increase the fixed rate per ton of scrap metal processed to a level at which the plant can ensure an income stream that covers its operating costs, even during an economic downturn.

Ok, so CR is getting increasingly difficult for me. The issue raised is how to handle :downturns", choice D clearly states that increase the fixed rate so as to cover it even during an economic downturn. So how much clearer can we get, yet that is incorrect. So C says that well we go with an uniform fee - how does that solve the issue, what if the fee is not even enough to cover normal operations, companies dump more metal yet they pay the same $. Can someone clearly explain why is D incorrect and C correct?

sky · Answer

I agree with you mainhoon. Even I picked D .

shalu · Answer

Both C and D look fine...how to decide which one is better.....

psychomath · Answer

I go with C.
I envy the smart people here who can say if this is a sub-600 question, when this question would pop up in the test (whether it would strike u at first or in the middle) etc....Kudos for that!!

MICKEYXITIN · Answer

the scope of this argument is how to make revenue consistant not how to cover the operational cost.
(C): making an uniform monthly fee is the way to ensure stable income.
(D): is talking anout increase the rate but not ensure how we can make income stable. Increase#stable. Moreover, the premise also said that the income is ALWAYS sufficient to cover the operational cost so the cost cover is out of scope here.
At first i thought this was a tough question as C and D are tricky but after reading carefully, i came to conclude that all things we need to pick the right answer also laid in the argument. If we read the argument more carefully and improve the temporary memory with enough information, such kind of question will not challenge us more in the future.

NikhilST · Answer

Hello
The question is talking about avoiding inconsistencies. Now, even if were to raise the per ton cost of the processing, the plant intake would still vary (between good, normal months and the bad months) when you look at the tonnage being processed- still showing inconsistencies.

Hope this helps!

Posted from my mobile device

VerbalBot · Answer

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A scrap metal recycling plant processes the excess metals

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A scrap metal recycling plant processes the excess metals

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