ARG-069

The following appeared in a memo from the new vice president of Sartorian, a company that manufactures men's clothing.

"Five years ago, at a time when we had difficulty obtaining reliable supplies of high-quality wool fabric, we discontinued production of our popular alpaca overcoat. Now that we have a new fabric supplier, we should resume production. Given the outcry from our customers when we discontinued this product and the fact that none of our competitors offers a comparable product, we can expect pent-up consumer demand for our alpaca coats. Due to this demand and the overall increase in clothing prices, we can predict that Sartorian's alpaca overcoats will be more profitable than ever before."


Write a response in which you discuss what questions would need to be answered in order to decide whether the prediction and the argument on which it is based are reasonable. Be sure to explain how the answers to these questions would help to evaluate the prediction.


In this memorandum, the vice president of Sartorian (S) believes that the resumption of wool coat production will bring in more profit to the enterprise based on the following reasons: a new fabric supplier, booming wool coat demand, and overall increase in prices in the garment industry. While this may be the case, there are a number of questions regarding his lines of reasoning that requires further analysis. The argument could end up being pretty convincing or invalid in the end, depending on the answers to those questions.


First of all, we need to know whether the new supplier is the same as the original supplier. If the new suppliers will not be able to produce the same quality wool as the previous suppliers, and thus they will not be able to manufacture similar wool coats. Even if the new supplier can provide high quality wool, if the price exceeds S’s scope, S will not be able to accomplish continuous production. It is also possible that the new supplier’s capacity of production is so low that it isn’t able to meet S's requirements. If any of the three aforementioned possibilities exist, the author's conclusion will be overturned. Otherwise, the conclusion will be supported.


At the same time, whether customer protestation against product suspension is representative of customer demand for said coat is yet to be answered. First, we are uninformed as to how many people are complaining about the suspension of wool coats; is it possible that only 2 in 1000 people are complaining and are complaining repeatedly; second, is this protest really due to product suspension? Could it be a protest against some of S's other actions, coincidentally occurring at the same time as product suspension, which would lead to an erroneous belief that an association linking the two together existed? Additionally, even if customer protestation is representative of demand, is the fact that competitors do not manufacturing the same product is equivalent to a S monopoly? If the answer to any of the aforementioned questions turns out to be yes, the author’s conclusion will be weakened. Otherwise, the author’s conclusion will be bolstered.


Even if the protest is really due to product suspension, and competitive companies do not possess the capacity to manufacture the same style of clothing, we still need to know whether the demand five years ago has continued and will proceed to continue in the future. Despite the fact that there was demand for the wool coat five years ago, it is likely that there are numerous inexpensive alternatives. Additionally, clothing trends are generally short lived—it’s likely that a fashion trend will be out of vogue after a single season. If the current demand is different from that of 5 years ago, the author's views will lack support.


Even if the aforementioned statement all held true, it would still be impossible to ensure that S’s wool coats would bring in more profit than before, as increase or decrease in profit is dependent on product income and cost. Sales in re-manufactured wool coats may be lower and the cost could be higher than before. If the above possibilities exist, the author's conclusion will wane. Even if profit margins are high, it is impossible to ensure that other manufactures will not participate in the production of this garment. If there is competition, S's profits will also decrease in the future.


Only after those questions are adequately addressed can we effectively evaluate the author’s argument and reach a logically sound conclusion.



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