Over Time, the Costs of Processing Go Down...

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The following appeared as part of an annual report sent to stockholders by Olympic Foods, a processor of frozen foods:

"Over time, the costs of processing go down because as organizations learn how to do things better, they become more efficient. in color film processing, for example, the costs of a 3-by-5-inch print fell from 50 cents for five-day service in 1970 to 20 cents for one-day service in 1984. The same principle applies to the processing of food. And since Olympic Foods will soon celebrate its 25th birthday, we can expect that our long experience will enable us to minimize costs and thus maximize profits."

Discuss how well reasoned you find this argument. In your discussion, be sure to analyze the line of reasoning and the use of evidence in the argument. For example, you may need to consider what questionale assumptions underlie the thinking and what alternative explanations or counterexamples might weaken the conclusion. You can also discuss what sort of evidence would strengthn or refute the argument, what changes in the argument would make it more logically sound, and what, if anything, would help you better evaluate its conclusion. ><

The argument that the costs of processing go down as organizations become more efficient as they learn how to do things better over time is rather flawed as it ignores many crucial assumptions. For starers, the argument fails to consider the positive effects of the experiences of the management have over the costs of operation. Moreover, the argument does not take into consideration of the level of maturity of the industry of frozen food processing. Finally, the argument does not account for the cost reductions brought about by the advancement of technology.

The argument assumes that the experiences of management have over the costs of operation is minimal. Studies conducted by business schools and business magazines on successful and profitable corporations show that the experiences of the...
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