Hello, I have a gmat exam coming up soon and I have been practising with full length exams for a while now.
For the AWA i have no idea where I stand, would someone please give my essay a read and tell me what level I am at (2,3,4,5). Right now I have no clue and I would just like to now if my essay is good enough to hit the 4 - 5 score mark or not.
Your help is much appreciated! Thanks.
Here is the essay prompt and my response.
AWA ESSAYS: Analyze Argument
ESSAY QUESTION:
The following memo was circulated by the management team of a retail company:
"We are very pleased to announce the relocation of our inventory, which had been located in four different warehouses throughout the country, to a single new warehouse near Company headquarters in Boston. This consolidated location will cut the company’s expenses for warehouse rent in half. As a result we expect our monthly profitability to go up by this amount."
MY RESPONSE:
The argument states that a retail company headquartered in Boston has relocated 4 of its inventory warehouses into 1 consolidated location at its headquarter. The company management cites cheaper rental expenses as the major reason for this move. They anticipate the monthly rent will be cut in half at this new location and therefore conclude that their monthly profitability will go up by the same amount. Although at first the argument may sound justified, it does have several flaws. When making the claim that profitability will increase, the management is assuming that by moving the warehouse to one location there will be no other increase in cost.
Firstly, the argument is assuming that there is zero transportation cost for shipping inventory items from the Boston location to a location that was closer to one of the previous warehouses. For example, if one of the previous warehouses was in Texas and if Texas accounts for a significant portion of the monthly revenue, say 20%, then the transportation cost for shipping the items to Texas from Boston will much higher than shipping the item within Texas from the Texas warehouse. This cost could be more than the rental savings that the company will generate by moving the warehouse to Boston and therefore hurt the profitability instead of improving it.
Secondly, the argument fails to mention any information regarding the cost of moving the warehouse from the other 4 locations to the one in Boston nor does it mention when the profitability can be realized. For example, the cost of decommissioning the warehouses can be $100,000 and the savings in rent could just be $10,000 per month. This would mean that it could take several months to recoup the cost before the additional monthly profits can be realized.
Thirdly, the argument can be strengthen by including additional information to support the claim that monthly profitability will increase for sure. For example, if the majority of the business for the company was coming from overseas and that the cost of shipping and transportation would be exactly the same from Boston as it was from the other 4 warehouses, then it would make sense to have all the inventory in 1 location and rental savings would translate into profitability.
Lastly, the company managements claim that the profitability will in fact increase upon moving to one consolidated warehouse location is not warranted and requires further investigation and answers to some key questions such as, what is the cost of transportation, cost of decommissioning the warehouses and when can the additional profits be realized. Although the company may save by paying half the rent, it may not be significant enough in the greater scheme of things.
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