Email from account manager to customer

[Meerak869]

Source Mgmat CAT

Email #1

Email from account manager to customer

February 17, 9:33 a.m.

I received your order for 50 plastic syringes and 550 single-use needles (one per injection). Also, the portable infusion pumps are on back-order. I can get you 300 now but the other 900 won’t be available until March. In response to your question, the plastic syringes typically last for 30 to 40 injections; they are guaranteed to last for a minimum of 20 injections.

Finally, current prices are $20 per box of 50 syringes, $25 per box of 50 needles, and $175 per box of 10 infusion pump kits.

Email #2

Email from customer to account manager

February 17, 10:42 a.m.

I noticed that the price of the pumps is set to increase by 15% next month. Will we still receive this month’s price on the entire order, including the ones we receive next month? My boss is already upset about some of the price increases earlier this month. Do you offer any large-volume discounts? We’re ordering more than 1,000 pumps.

Hold off on the syringe order; my boss has found syringes that are guaranteed for at least 30 injections. They’re more expensive ($30 for a box of 50), but he likes the 30-injection guarantee. If we were able to get a volume discount, though, he might still be willing to give you the order.

Email #3
Email from account manager to customer

February 17, 1:28 p.m.

Pricing is guaranteed at the time of your order, even if the price increases before you receive the shipment. My supervisor agreed to a 5% discount for any orders of more than 1,000 units of a single product or a 10% discount on the whole order if you order a total of 2,000 units for all products combined. I can’t give you a discount on just the 50 syringes, but you already qualify for the 5% discount on the pumps.

For each of the following statements, select Yes if the statement can be shown to be true using the information provided. Otherwise, select No.

Yes No
1. Because the supplier declined to offer a discount on the syringes, the customer will order syringes from the other company instead.
2. The supplier indicates that his syringes typically allow 33 1/3% to 50% more injections than the guarantee.
3. The customer is willing to switch to another supplier if her needs are not met satisfactorily.

since customer said Hold off on the syringe order; my boss has found syringes that are guaranteed for at least 30 injections. They’re more expensive ($30 for a box of 50), but he likes the 30-injection guarantee. If we were able to get a volume discount, though, he might still be willing to give you the order. I felt stmt1 is yes but it is not so.

I got and understood the stmt2 right.

but I got confused reg stmt3 also again in the same way as of stmt1.

[tim]

I was about to answer your question when I decided to look up the official explanation just to make sure I didn't repeat what it said. The official explanation seems to sum things up perfectly (or at least the way I would have!), so please let us know what about the official explanation didn't make sense to you. I certainly hope you don't think that just because a customer asks for a discount that means they are planning (or even considering) to jump to a different company if the discount doesn't come through! That's definitely not how the world of business works, and the GMAT seems quite comfortable testing those common sense notions of business on the test.

[MichaelW594]

Tim, thanks for your response.

I also answered the first statement with a "yes" because the customer makes a clear statement that "If we were able to get a volume discount, though, he might still be willing to give you the order." I believe that it is fair to assume from this statement that if a volume discount is not provided, the customer will not be willing to purchase from this supplier.

If my assumption in incorrect, can you please explain how I can avoid this mistake in the future? The general assumption that I had when reading this passage is that the customer is being truthful. If this is not the case, how can the answer for statement 3 be yes? In this case, maybe the customer is in fact not willing to switch suppliers.

Thanks,
Mike

[RonPurewal]

the customer's stated reason for ordering from the other company is that the other company's syringes are better (they're guaranteed for 30 shots, rather than just 20).

the customer['s boss] had ALREADY decided to switch suppliers for the syringes BEFORE this supplier declined to issue a discount.
an effect can't come before its cause, so, that's not the cause.