Loss Layer

Welcome! You are encouraged to register with the site and login (for free). When you register, you support the site and your question history is saved.

The Nowka apparel company's design for its new luxury jacket, the Fleecer, included a special design for a synthetic fabric layer that was intended to complement the model's image. The winning bid for supplying this synthetic fabric was submitted by Rainflex. Analysts concluded that the bid would only just cover Rainflex's costs on the fabric, but Rainflex 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 Rainflex's executives?

Review: Loss Layer


Explanation

Reading the question: as we did in Shipping Skills, we can focus on the opinion first. We might get the idea from the stem, which mentions a "claim," an opinion-charged word, or from the appearance of the word "claim" in the prompt itself. "Rainflex executives claim." We'll work back from there. They want to do some bid even though the bid will just cover costs on the fabric. They evidently think there is some other way to make a profit from the bid. So our correct answer may indicate a way to get profit from the bid even though the dollar amount won in the bid is not high. And the answer choice must somehow discuss profit or have implications for profit to be of basic relevance.

Applying the filter: Choice (A) doesn't lead to profits, since the jacket's size, number of flaps, et cetera, are already included in the (high) cost. Choice (B) is relevant to profit, but it says that Rainflex already has the contracts. If this contract in question were unprofitable but led to later profitable work, that would be a great answer, but that's not what (B) is saying. So (B) is out. Choice (C) reduces a cost for Rainflex, which is consistent with our filter, but that doesn't help it profit when the bid is too low to cover even the fabric cost. Choice (D) is similar to (B): it gives us an ongoing stream of business. If these jackets last forever but need the lining replaced, and Rainflex gets some or all of that, maybe it can profit. Choice (D) is stated in modest terms, but it's relevant and points to a source of profit, whether large or small. Choice (E) is unrelated to whether there is a way for Rainflex to profit from this deal, although it has implications for Rainflex's business overall.

Logical proof: now that we have done a few examples of creating and applying filters to the answer choices, we'll start incorporate the second step of the Critical Reasoning Strategy described at the front of this book: establishing logical proof. One method to establish logical proof of an answer. We can do this for (D). In one case, imagine that buyers of the jacket purchase so many pieces of fabric of these jackets that they are ultimately paying the initial price of the jacket many times over. In that case, the fabric company could indeed make a profit on these jackets. On the other hand, if we negate (D), we are saying there are no further sales of this jacket through replacement. That would weaken the conclusion. We can see that choice (D) describes something that is material (so to speak) to the argument. The correct answer is (D).


If you believe you have found an error in this question or explanation, please contact us and include the question title or URL in your message.