The following appeared in a memorandum from the owner of Movies Galore, a chain of movie-rental stores."Because of declining profits, we must reduce operating expenses at Movies Galore's ten movie-rental stores. Raising prices is not a good option, since

The following argument is flawed because it makes many assumptions and creates a blanket statement based on the skeptical results of one store changing their hours and inventory. It is understandable that this company wants to improve their profit making, but more details will need to be taken into consideration.

The argument assumes that all of it's ten stores will improve in their profits, based on changes that one store made. Just because the one store closed earlier and reduced its overall inventory does not mean more profits were made. There is a weak correlation between those three elements. If the owner wanted to see the impact those changes had on his customers, he could have tracked the profits from before the changes to after the changes to see if anything improved. Few customers complaining, does not mean that the profits increased. The word "few" is vauge. It could mean two, five, or one customer(s), we do not know.

The demographics in Marston may be different to the demographics of the remaining 9 stores. The citizens of that town may work close to the store, and can get there at earlier times. Dowtown areas tend to be popular areas, and with constant people coming in and out, they could afford to close early, whereas a Movie Galore located in a less populated area, would open longer to increase the likleyhood of customers.

The argument also asssumes that the only reason the franchise is famous, is because of its low prices. This may be true, but other factors come into play as well. They may be famous because of the types/genres of movies the offer. They may have a selection of classic movies that could not be found anywhere else. If they were to update their inventory, and not house any DVDs released more than five years ago, that could harm their profits even more. To determine the actual reason of their former success, a survey can be generated to determine why customers like their store and suggestions to improve.

Due to the surge of online movie streaming, and $1 rentals, increasing Movie Galore's profits is critical. The owner must examine all of the factors that may have caused a decline in his overall profit, and use his current customers to his advantage, by creating a survey or a loyalty program, to help him determine which operating expenses should remain the same, and which ones he can change.