#17 - Industrial adviser: If two new processes under

[Administrator]

Complete Question Explanation

Must Be True—PR. The correct answer choice is (C)

This stimulus contains two conditional statements provided by an industrial advisor. The first statement is that if two new processes that are being considered have no substantial difference in cost, then the less environmentally damaging alternative should be chosen:

• substantial cost difference less damaging alternative chosen

There is a different model if a company already uses an environmentally damaging process. If retooling for a less damaging process would involve substantial cost, then that company should retool only if that retooling is legally required or would likely bring long-terms savings substantially greater than the cost:

• Retooling with substantial cost legally required or LT savings > cost

The question stem asks which answer choice conforms most closely to the principles as stated by the industrial advisor.

Answer choice (A): The industrial advisor suggests in the stimulus that substantially expensive retooling should be done only if it is legally required or would produce substantial savings. In this answer choice, there is a new law, but this does not suggest a legal requirement. The referenced law provides tax credits, a financial incentive, but the savings associated with the more environmentally sound process for manufacturing dye would be slight. Since the new process in this answer neither provides substantial savings nor is legally required, the advice that the company should change over to the new process would not accord with the principles provided by the industrial advisor.

Answer choice (B): In this answer choice, the pin cushion company is considering changing its process to one that is more environmentally friendly in order to preserve its image. The first piece of advice from the industrial advisor would not be relevant here, since it is applicable only to a decision between two processes. In the scenario provided by this answer choice, the pin cushion company already has a process in place. According to the advisor, a substantially more expensive new process like the one under consideration by the factory should only be taken on when it is legally required or when it provides substantial savings. This answer choice specifies that both processes are legal, and rather than providing substantial savings, the new process would lead to substantial losses. Since the industrial advisor would advise against change, the advice that the company should change its process would be contrary to that suggested by the author of the stimulus.

Answer choice (C): This is the correct answer choice. In this scenario, the two processes being considered for staple manufacture are not substantially different in cost. Under the advisor’s model, the manufacturer should choose the most environmentally friendly process. Process A is slightly more expensive but far more environmentally friendly than Process B. According to the advisor’s principles, the manufacturer should choose Process A, which is recommended in this case.

Answer choice (D): In the scenario provided by this answer choice, the company is deciding between two processes of ball bearing manufacture which are not substantially different in cost. The industrial advisor would recommend going with process B, since it would be the more environmentally friendly choice. This answer choice recommends Process A, contrary to the advisor’s model, apparently based on the slight savings associated. Since this answer choice does not follow the principles of the industrial advisor, it should be eliminated.

Answer choice (E): In this scenario, the shoelace company already has a process in place, so the first piece of advice offered by the industrial advisor would be inapplicable. The switch to a new, more environmentally friendly process would be costly, and the stimulus provides that an expensive process changeover is only justified by legal requirement or long-term savings that substantially outweigh the associated costs. In this answer choice, the savings apparently do not even equal the cost, so switching processes does not conform to the principles of the industrial advisor.

[rpark8214]

In regards to answer choice (E), what does it exactly mean when the choice states "the cost would be almost entirely recovered in long-term savings?" Does it mean the substantial costs for switching to a new process would be recouped through long-term savings? If this is the case, I believed that if the substantial costs were covered in long-term savings, it was likely that long-term savings would be greater than the cost, and chose (E). Thanks for your help!

[AthenaDalton]

Hi rpark,

The problem with answer choice (E) lies in its wording.

The prompt states that a company should retool its process only if (1) legally required or (2) doing so would result in long-term savings substantially greater than the cost. To phrase this differently, a company should only invest in retooling if it will save 100% of what it invested, and then make substantial profits on top of that.

Answer choice (E) states that the cost of changing processes "would be almost entirely recovered. Put another way, retooling would only recoup (for example) 90% of the costs.

This is slightly different from what the prompt stated. Recovering "almost all" of the costs is not the same as recovering "substantially more money than" the investment costs. Since this answer choice does not fit precisely into the two options given in the argument, we can eliminate answer choice (E).

Hope this helps!

Athena Dalton

[jenna_d]

I'm very confused by this question - does answer c refer to the diagram of (not) substantial cost difference --> less damaging alternate chosen or the retooling --> retooling legal or likely long term savings > cost - where does the answer fit into these diagrams? Thanks!

[Eric Ockert]

Hi Jenna!

Fortunately, answer choice (C) fits into the first (and more straightforward) rule in the stimulus. In that answer, Process A is more expensive than B, but not substantially so. This is enough to tell us that there is not a substantial cost difference between the two processes. That activates the sufficient condition of the first rule which would then dictate that the less environmentally damaging process should be chosen. Answer choice (C) shows that Process A is less environmentally damaging and thus this answer follows the first rule by concluding that we should choose Process A.

Hope that helps!