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 difficulties in obtaining reliable supplies of high quality wool fabric we discontinued production of

The new vice president of Sartorian claims that by reintroducing alpaca overcoat after five years, the customers will be willing to pay significantly higher prices for alpaca overcoats than they did five years ago, which could help them generate profits. These claims were made by assuming that as alpaca has not been available for five years their demands have increased and selling them at higher margins would earn them higher profits. However, to fully evaluate the argument drawn by the vice president the following few assumptions should hold true.
Firstly, there is no evidence given by the vice president that as the alpaca were not sold for five years their demand in the market have increased. For instants, five years ago although the alpaca overcoat were prevalent the customers didn’t find them as attractive and the quality of the wool fabric was not a major deciding factor for them. If this scenario has merit, then the argument drawn by the vice president is significantly weakened.
Secondly, the fact that the prices of the other clothing has increased don’t prove that the price of alpaca will also be high. Suppose, due to the prevalence of high quality wool fabric there are more quantity of cloths being made with these wools and reintroducing the alpaca coats would just add another item to consider in their catalog. Thus, as the supply of the quality wool fabric increases their value decreases, according to basic economic principles. Thus if this scenario turns out to be true, then the argument drawn by the vice president will not hold water.
Lastly, the increase in sales of the alpaca coats doesn’t prove that it will be lucrative for the company. The increase in supply of the quality wool fabric and their decrease in value could affect the willingness of the customers to pay higher prices which is a deciding factor for the profits generated by the company. If this scenario holds true, then the argument drawn by the vice president will be considered as feeble.
In conclusion, the argument, as it stands now, is considerably flawed due to its severe reliance on several unwarranted assumptions. If the vice president is able to provide valid evidence for the assumptions mentioned above – perhaps in terms of systematic research data – then it will be possible to fully evaluate the viability of the conclusion provided by the vice president that by reintroducing alpaca overcoat after five years, the customers will be willing to pay significantly higher prices for alpaca overcoats than they did five years ago, which could help them generate profits.