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A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]
18 Dec 2012, 05:47

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Expert's post

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Hi folks,

Here is a tricky 2 part question on Multi Level Marketing company (MLM).

A Multi Level Marketing company (MLM) builds its business through sponsorship with the company associates. An associate is rewarded a commission based on how much business is generated in his group i.e. people under him. A new associate joins the business at the level immediately below his/her sponsor associate . The business generated by an associate is termed as 'Individual Points', while total (or sum of ) business generated by the associate's group (including him) is termed as 'Cumulative Points'. The associate's 'Commission Points' equals 'Cumulative Points' of associate's group less Maximum 'Cumulative Points' generated by any of the associates directly under him. Pat is one such company associate, who has 3 levels of hierarchy under him. Pat's 'level 1' (i.e. directly under Pat) has 2 associates, 'level 2' (associates directly under any of the level 1 associates) has 5 associates, & 'level 3' has 1 associate. In a particular month, Pat and each of his group associates have generated individual business worth 100 points.

Based on the information provided, select the maximum, & minimum possible values for 'Commission Points' for Pat, in the table. Different hierarchical structures of the associates in the group can lead to different values of 'Commission Points'.

Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]
18 Dec 2012, 14:46

Maximum 500, Minimum 200. Too many words confused me, and hence was totally thrown out and ended up mixing Commission points and Cumulative points. But took a step back and realized that Commossion Points were to be calculated only for Pat, coz associates' commission points under Pat have no significance.

Anyways, my bet is Max 500 and Min 200. Let me know the OA.

Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]
18 Dec 2012, 15:06

And the reasoning is as follows: Total Commission Point For Pat == 900 - (Max Cumulative Point of Level 1 Associates) So Commission Point For Pat is 1. Maximum when "Max Cumulative Point of Level 1 Associates" is Minimum and 2. viceversa.

So,

1. Max Cumulative Point of Level 1 Associates is Maximum when All the Level 2 and Level 3 Associates are under one Level 1 Associates So one of the Level 2 Associate Cumulative Point will be 700 and the other one’s cumulative point will be 100. Hence Commission Point for Pat == 900 – 700 = 200.

2. Max Cumulative Point of Level 1 Associates is Minimum when the Level 1 Associates have same Cumulative Point. (Coz a mismatch in Cumulative Points will decrease the Commission Point for Pat). So the Level 2 Associates have Cumulative Point == 400 each. Hence Commission Point for Pat == 900 – 400 = 500.

Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]
18 Dec 2012, 21:04

Expert's post

abikumar wrote:

Maximum 500, Minimum 200. Too many words confused me, and hence was totally thrown out and ended up mixing Commission points and Cumulative points. But took a step back and realized that Commossion Points were to be calculated only for Pat, coz associates' commission points under Pat have no significance.

Anyways, my bet is Max 500 and Min 200. Let me know the OA.

Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]
25 Dec 2012, 09:41

abikumar wrote:

And the reasoning is as follows: Total Commission Point For Pat == 900 - (Max Cumulative Point of Level 1 Associates) So Commission Point For Pat is 1. Maximum when "Max Cumulative Point of Level 1 Associates" is Minimum and 2. viceversa.

So,

1. Max Cumulative Point of Level 1 Associates is Maximum when All the Level 2 and Level 3 Associates are under one Level 1 Associates So one of the Level 2 Associate Cumulative Point will be 700 and the other one’s cumulative point will be 100. Hence Commission Point for Pat == 900 – 700 = 200.

2. Max Cumulative Point of Level 1 Associates is Minimum when the Level 1 Associates have same Cumulative Point. (Coz a mismatch in Cumulative Points will decrease the Commission Point for Pat). So the Level 2 Associates have Cumulative Point == 400 each. Hence Commission Point for Pat == 900 – 400 = 500.

i have got the minimum value equalet to 200,,,,but can't figure out the maximum value, which in my case is 600,,,can u plz help me out in simple explanation,,,thank u in anticipation,,,,

Value of cumulative point of B will be 400 which is as follows: B(100)+E(100)+F(100)+G(100) = 400 Value of cumulative point of A will be 400 which is as follows: A(100)+C(100)+D(100)+H(100) = 400

Remember the catch is that for A and B we need to calculate the cumulative point and not the commission point (which will be 300).

Extremely sorry for a late reply and for the distorted tree, am not very good at posting pictures on gmatclub.

Please let me know if you need any more clarity. Hope it helps.

Value of cumulative point of B will be 400 which is as follows: B(100)+E(100)+F(100)+G(100) = 400 Value of cumulative point of A will be 400 which is as follows: A(100)+C(100)+D(100)+H(100) = 400

Remember the catch is that for A and B we need to calculate the cumulative point and not the commission point (which will be 300).

Extremely sorry for a late reply and for the distorted tree, am not very good at posting pictures on gmatclub.

Please let me know if you need any more clarity. Hope it helps.

Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]
01 Jan 2013, 21:11

Expert's post

Maryam787 wrote:

abikumar wrote:

And the reasoning is as follows: Total Commission Point For Pat == 900 - (Max Cumulative Point of Level 1 Associates) So Commission Point For Pat is 1. Maximum when "Max Cumulative Point of Level 1 Associates" is Minimum and 2. viceversa.

So,

1. Max Cumulative Point of Level 1 Associates is Maximum when All the Level 2 and Level 3 Associates are under one Level 1 Associates So one of the Level 2 Associate Cumulative Point will be 700 and the other one’s cumulative point will be 100. Hence Commission Point for Pat == 900 – 700 = 200.

2. Max Cumulative Point of Level 1 Associates is Minimum when the Level 1 Associates have same Cumulative Point. (Coz a mismatch in Cumulative Points will decrease the Commission Point for Pat). So the Level 2 Associates have Cumulative Point == 400 each. Hence Commission Point for Pat == 900 – 400 = 500.

i have got the minimum value equalet to 200,,,,but can't figure out the maximum value, which in my case is 600,,,can u plz help me out in simple explanation,,,thank u in anticipation,,,,

in the above case we get 900-300=600, may i know how you ruled out the above case?

Hi,

Pl. read the 4th line of the dataset/question narration. It says... The associate's 'Commission Points' equals 'Cumulative Points' of associate's group less Maximum 'Cumulative Points' generated by any of the associates directly under him.

As per your arrangement, A's (Pat) commission Points = A's Cumulative points - C's Cumulative points, since between B & C; C (500) has more points than B. The condition says choose maximum of the two, so we have to choose C rather than B. You have deducted B's cumulative points (300) in the calculation.

in the above case we get 900-300=600, may i know how you ruled out the above case?

Hi,

Pl. read the 4th line of the dataset/question narration. It says... The associate's 'Commission Points' equals 'Cumulative Points' of associate's group less Maximum 'Cumulative Points' generated by any of the associates directly under him.

As per your arrangement, A's (Pat) commission Points = A's Cumulative points - C's Cumulative points, since between B & C; C (500) has more points than B. The condition says choose maximum of the two, so we have to choose C rather than B. You have deducted B's cumulative points (300) in the calculation.

Hope you get it right.

-Shalabh

Thanks shalabh Now i get it, i guess i need to improve my reading skills _________________

in the above case we get 900-300=600, may i know how you ruled out the above case?

Hi,

Pl. read the 4th line of the dataset/question narration. It says... The associate's 'Commission Points' equals 'Cumulative Points' of associate's group less Maximum 'Cumulative Points' generated by any of the associates directly under him.

As per your arrangement, A's (Pat) commission Points = A's Cumulative points - C's Cumulative points, since between B & C; C (500) has more points than B. The condition says choose maximum of the two, so we have to choose C rather than B. You have deducted B's cumulative points (300) in the calculation.

Hope you get it right.

-Shalabh

Thanks shalabh Now i get it, i guess i need to improve my reading skills