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The demand for large, family-sized vehicles will slump dramatically over the next ten years. Steel plating is a component used in these vehicles, and to obtain maximum price reduction on it, major automobile companies order it five years in advance of delivery, but they are postponing orders now.
Which of the following must be evaluated to validate the decision made by the major automobile companies?.
 
  • a)
    Whether the other components used in these vehicles have been ordered well in advance.
  • b)
    Whether the other components used in these vehicles are in short supply.
  • c)
    Whether the price of steel plating would rise significantly over the years.
  • d)
    Whether these companies cannot resell steel plating to other automobile companies at a bearable loss.
  • e)
    Whether the demand for small-sized vehicles will also slump dramatically over the next ten years.
Correct answer is option 'C'. Can you explain this answer?
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The demand for large, family-sized vehicles will slump dramatically ov...
This option is incorrect. Like option A, it focuses on the supplies of components other than steel plating, which is out of scope.
Argument construction
In the next decade, the demand for a certain type of car will go down. Companies generally order steel plating 5 years in advance to get the maximum discount from suppliers. It follows that the companies would have ordered steel plating for this type of car 5 years in advance when these types of cars had consistent demand. Now, after the companies learnt that the demand for this car type will go down, they want to postpone the orders for steel plating.
Predict an Evaluator
The major automobile companies tread cautiously. They anticipate that if the demand for the large, family-sized vehicles slumps to such an extent that they have to stop making these types of vehicles, then the pre-ordered steel plating would go waste and become a liability for them. However, if the demand for these types of vehicles does not slump to the extent that they have to stop making these types of vehicles, they may then, at that point in time, order the required amount of steel plating, though they will not get the hefty discount they would have got with an order made 5-years in advance. This seems to be the most rational decision.
Before postponing the orders, the major automobile companies must evaluate that if they would need steel plating in future, its supply will remain consistent and also, that its price is not likely to rise significantly higher than the present rates.
Predictive evaluator 1: Is the availability and the supply of steel plating likely to be consistent in the future?
Predictive evaluator 2: Will the price of steel plating rise significantly in future?
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The demand for large, family-sized vehicles will slump dramatically ov...
Evaluation of Option C:

Price of Steel Plating:
- Evaluating whether the price of steel plating would rise significantly over the years is crucial as it directly impacts the cost-saving strategy of major automobile companies.
- If the price is expected to rise, then postponing orders may result in higher expenses in the future.
- On the other hand, if the price remains stable or decreases, delaying orders could save money for the companies.

Relevance to the Decision:
- This evaluation is essential in validating the decision made by major automobile companies to postpone orders for steel plating.
- It directly addresses the core reason for ordering components well in advance – to obtain maximum price reduction.
- Understanding the future price trends of steel plating will provide clarity on whether postponing orders is a beneficial cost-saving strategy or a potential financial risk.

Conclusion:
Assessing the potential price fluctuations of steel plating is a critical factor in determining the validity of the decision made by major automobile companies. It directly impacts their cost-saving efforts and the overall financial implications of postponing orders. Therefore, evaluating the price of steel plating is essential in validating the companies' decision.
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The demand for large, family-sized vehicles will slump dramatically over the next ten years. Steel plating is a component used in these vehicles, and to obtain maximum price reduction on it, major automobile companies order it five years in advance of delivery, but they are postponing orders now.Which of the following must be evaluated to validate the decision made by the major automobile companies?.a)Whether the other components used in these vehicles have been ordered well in advance.b)Whether the other components used in these vehicles are in short supply.c)Whether the price of steel plating would rise significantly over the years.d)Whether these companies cannot resell steel plating to other automobile companies at a bearable loss.e)Whether the demand for small-sized vehicles will also slump dramatically over the next ten years.Correct answer is option 'C'. Can you explain this answer?
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The demand for large, family-sized vehicles will slump dramatically over the next ten years. Steel plating is a component used in these vehicles, and to obtain maximum price reduction on it, major automobile companies order it five years in advance of delivery, but they are postponing orders now.Which of the following must be evaluated to validate the decision made by the major automobile companies?.a)Whether the other components used in these vehicles have been ordered well in advance.b)Whether the other components used in these vehicles are in short supply.c)Whether the price of steel plating would rise significantly over the years.d)Whether these companies cannot resell steel plating to other automobile companies at a bearable loss.e)Whether the demand for small-sized vehicles will also slump dramatically over the next ten years.Correct answer is option 'C'. Can you explain this answer? for GMAT 2024 is part of GMAT preparation. The Question and answers have been prepared according to the GMAT exam syllabus. Information about The demand for large, family-sized vehicles will slump dramatically over the next ten years. Steel plating is a component used in these vehicles, and to obtain maximum price reduction on it, major automobile companies order it five years in advance of delivery, but they are postponing orders now.Which of the following must be evaluated to validate the decision made by the major automobile companies?.a)Whether the other components used in these vehicles have been ordered well in advance.b)Whether the other components used in these vehicles are in short supply.c)Whether the price of steel plating would rise significantly over the years.d)Whether these companies cannot resell steel plating to other automobile companies at a bearable loss.e)Whether the demand for small-sized vehicles will also slump dramatically over the next ten years.Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for GMAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The demand for large, family-sized vehicles will slump dramatically over the next ten years. Steel plating is a component used in these vehicles, and to obtain maximum price reduction on it, major automobile companies order it five years in advance of delivery, but they are postponing orders now.Which of the following must be evaluated to validate the decision made by the major automobile companies?.a)Whether the other components used in these vehicles have been ordered well in advance.b)Whether the other components used in these vehicles are in short supply.c)Whether the price of steel plating would rise significantly over the years.d)Whether these companies cannot resell steel plating to other automobile companies at a bearable loss.e)Whether the demand for small-sized vehicles will also slump dramatically over the next ten years.Correct answer is option 'C'. Can you explain this answer?.
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