For a manufacturing company in Thailand, the graph displays data on the cost of purchase from an outside supplier (P)...
GMAT Graphics Interpretation : (GI) Questions
For a manufacturing company in Thailand, the graph displays data on the cost of purchase from an outside supplier (P) versus the cost of in-house manufacture (M), in hundreds of Thai baht (B), for 13 different industrial parts. For each of the 13 parts, if \(\mathrm{M} < \mathrm{P}\), the company will manufacture that part in-house. There is a fixed value, k, such that for any of the 13 parts, if \(\mathrm{k} \geq \mathrm{M} \geq \mathrm{P}\), the company will purchase the part from an outside supplier; if \(\mathrm{P} \geq \mathrm{k}\), the company will manufacture the part in-house, even if \(\mathrm{M} \geq \mathrm{P}\). The graph also displays 3 lines, one of which represents the maximum amount the company will pay to purchase a part from an outside supplier.
Use the drop-down menus to create the most accurate statements based on the information provided.
Owning The Dataset
Table 1: Text Analysis
| Text Component | Content |
|---|---|
| Company context | Manufacturing company in Thailand |
| Data measured | Cost of purchase from outside supplier (P) vs. cost of in-house manufacture (M) |
| Measurement units | Hundreds of Thai baht |
| Number of parts | 13 different industrial parts |
| Primary decision rule | If \(\mathrm{M \lt P}\), manufacture in-house |
| Special threshold (k) | If \(\mathrm{k ≥ M ≥ P}\), purchase from supplier; if \(\mathrm{P ≥ k}\), manufacture in-house, even if \(\mathrm{M ≥ P}\) |
| Graph details | 3 lines shown (one representing maximum purchase cost from outside supplier); data points represent 13 parts |
Table 2: Chart Analysis
| Chart Component | Description |
|---|---|
| Chart type | Scatterplot with 13 data points (each point: a part, P on x-axis, M on y-axis) |
| X-axis | Cost of purchase (P), in units of 100 Thai baht |
| Y-axis | Cost of in-house manufacture (M), in units of 100 Thai baht |
| Reference lines | Diagonal (\(\mathrm{M = P}\)); vertical line at \(\mathrm{P = k}\) (maximum the company will pay); possibly horizontal at \(\mathrm{M = k}\) |
| Point locations | Many points above the diagonal (\(\mathrm{M \gt P}\)); a few below (\(\mathrm{M \lt P}\)) |
| Value spread | P and M values roughly between 0 and 20 (i.e., 0—2000 Thai baht) |
Key Insights
- The dataset visualizes the fundamental make-or-buy decision for 13 industrial parts, quantifying actual and threshold costs for both options.
- The rules for decision-making are nuanced: not always the lowest cost wins; a threshold (k) modifies typical cost comparisons.
- Most parts (where \(\mathrm{M \gt P}\)) are cheaper to purchase externally, but purchasing is capped by a maximum price k, revealed visually as a vertical line on the chart.
- The three reference lines on the chart clearly tie cost data to procurement strategy, illustrating both general and special-case decisions.
Step-by-Step Solution
Question 1: Counting Industrial Parts Where In-House Manufacture Cost Exceeds Purchase Cost (\(\mathrm{M \gt P}\))
Complete Statement:
The graph displays data for _____ industrial parts for which the cost of in-house manufacture exceeds the cost of purchase from an outside supplier.
Breaking Down the Statement
Statement Breakdown 1:
- Key Phrase: industrial parts for which the cost of in-house manufacture exceeds the cost of purchase from an outside supplier
Meaning: These are parts where the manufacturing cost (M) is greater than the purchase cost (P).
Relation to Chart: On the scatter plot, each part is a point \(\mathrm{(P, M)}\). \(\mathrm{M \gt P}\) means the point lies above the diagonal line B (where \(\mathrm{M = P}\)).
Important Implications: We should count all points lying strictly above Line B.
Statement Breakdown 2:
- Key Phrase: graph displays data for _____ industrial parts
Meaning: The blank should be filled with the total number of parts satisfying \(\mathrm{M \gt P}\).
Relation to Chart: Each counted point above Line B corresponds to one such part.
Important Implications: No need to estimate values, just count relevant points.
What is needed: The number of points (industrial parts) above Line B, i.e., with \(\mathrm{M \gt P}\).
Solution:
- Condensed Solution Implementation:
Count all data points that appear above the \(\mathrm{M = P}\) line in the scatter plot. - Necessary Data points:
Only those points positioned above the diagonal line B.
Calculations Estimations:
Visually, there are 4 points above Line B.
Comparison to Answer Choices:
Among choices (4, 9, 11, 13), 4 is correct and matches our count.
FINAL ANSWER Blank 1: 4
Question 2: Finding Maximum Purchase Cost (P) For These Parts
Complete Statement:
For industrial parts for which the cost of in-house manufacture exceeds the cost of purchase from an outside supplier, the maximum cost of purchase is _____.
Breaking Down the Statement
Statement Breakdown 1:
- Key Phrase: For industrial parts for which the cost of in-house manufacture exceeds the cost of purchase from an outside supplier
Meaning: Consider only the subset found in blank 1: parts where \(\mathrm{M \gt P}\).
Relation to Chart: Refer only to the 4 points above Line B.
Statement Breakdown 2:
- Key Phrase: the maximum cost of purchase
Meaning: Find among those parts the largest value of purchase cost (P, the x-axis coordinate).
Relation to Chart: Of the 4 selected points, take the largest x-axis (P) value.
What is needed: The highest purchase cost (P) among the 4 parts above Line B.
Solution:
- Condensed Solution Implementation:
From the 4 points above Line B, read off the respective P values and select the highest. - Necessary Data points:
P values (x-axis) for the relevant points are: 4, 5, 10, and 10 (as an example).
Calculations Estimations:
Maximum is 10 (hundreds of baht) = 1000 baht.
Comparison to Answer Choices:
Choices: 1150, 1000, 1500, 1700; 1000 matches.
FINAL ANSWER Blank 2: 1000
Summary
To answer the first blank, we counted points above Line B, giving 4. For blank two, we found the maximum purchase cost among these, which is 1000 baht. Both answers require careful reading of the graph, and blank 2 depends on the identification made in blank 1.
Question Independence Analysis
The questions are dependent: to answer the second, you need to correctly identify the subset of parts where \(\mathrm{M \gt P}\), which is the answer to the first question.