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# A tricky 2 Part Question on Multi Level Marketing (MLM)

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e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2100
A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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18 Dec 2012, 06:47
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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'.

Make only two selections, one in each column.

-Shalabh
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Intern
Joined: 07 Aug 2012
Posts: 40
GMAT 1: 690 Q49 V34
GMAT 2: 750 Q51 V40
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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18 Dec 2012, 15:46
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.
Intern
Joined: 07 Aug 2012
Posts: 40
GMAT 1: 690 Q49 V34
GMAT 2: 750 Q51 V40
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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18 Dec 2012, 16:06
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.
e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2100
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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18 Dec 2012, 22:04
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.

Hi abi,

Yes you are correct. Answer is 200 &500. Just posted an add-on question. You must attempt. what-you-choose-is-what-you-weigh-143895.html

-Shalabh
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Intern
Joined: 07 Aug 2012
Posts: 40
GMAT 1: 690 Q49 V34
GMAT 2: 750 Q51 V40
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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18 Dec 2012, 23:03
Shalabh,

Thanks. I tried that other question too. Please let me know whether my solution there is right.

Regards,
Abhishek
e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2100
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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19 Dec 2012, 21:51
1
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Expert's post
abikumar wrote:
Shalabh,

Thanks. I tried that other question too. Please let me know whether my solution there is right.

Regards,
Abhishek

Hi Abhi,

Yes, you are correct. Keep it up. Pl. try this one too. multi-source-reasoning-question-advertising-channels-143952.html

-Shalabh
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BSchool Forum Moderator
Joined: 27 Aug 2012
Posts: 1194
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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20 Dec 2012, 02:59
Shalabh,
Kudos man..
Can you please share the explanations for this qs. ?
This is indeed a tricky one and also very time consuming I think..

It would be really great if you can come up with strategies to shot them within 2 minutes time constraint.

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Intern
Joined: 31 Aug 2012
Posts: 43
GPA: 3.65
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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25 Dec 2012, 10:41
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,,,,
Intern
Joined: 07 Aug 2012
Posts: 40
GMAT 1: 690 Q49 V34
GMAT 2: 750 Q51 V40
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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29 Dec 2012, 00:46
Hi Maryam, the tree for the maximum value is something like this:

---------Pat-------
---A---------B-----
--CD-------EFG---
----H--------------

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.

Regards,
Abhishek
e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2100
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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01 Jan 2013, 22:08
abikumar wrote:
Hi Maryam, the tree for the maximum value is something like this:

---------Pat-------
---A---------B-----
--CD-------EFG---
----H--------------

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.

Regards,
Abhishek

That's nice explanation Abhishek.

-Shalabh
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e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2100
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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01 Jan 2013, 22:11
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,,,,

Hi Maryam,

Pl. see this image. Hope it helps.

-Shalabh
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Director
Joined: 28 Jul 2011
Posts: 537
Location: United States
GPA: 3.86
WE: Accounting (Commercial Banking)
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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03 Jan 2013, 00:21
Hi Egmat,

I have a small doubt regarding Max value i got 600 as the max value

I have drawn a tree some thing like

--------------A--------------
----B----- ----C--------
-----D---- -- -E-F-G-H-----
-----I----

in the above case we get 900-300=600, may i know how you ruled out the above case?
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e-GMAT Representative
Joined: 02 Nov 2011
Posts: 2100
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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03 Jan 2013, 02:49
mydreammba wrote:
Hi Egmat,

I have a small doubt regarding Max value i got 600 as the max value

I have drawn a tree some thing like

--------------A--------------
----B----- ----C--------
-----D---- -- -E-F-G-H-----
-----I----

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
_________________

| '4 out of Top 5' Instructors on gmatclub | 70 point improvement guarantee | www.e-gmat.com

Director
Joined: 28 Jul 2011
Posts: 537
Location: United States
GPA: 3.86
WE: Accounting (Commercial Banking)
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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03 Jan 2013, 03:40
egmat wrote:
mydreammba wrote:
Hi Egmat,

I have a small doubt regarding Max value i got 600 as the max value

I have drawn a tree some thing like

--------------A--------------
----B----- ----C--------
-----D---- -- -E-F-G-H-----
-----I----

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
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Posts: 2100
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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03 Jan 2013, 06:53
mydreammba wrote:
egmat wrote:
mydreammba wrote:
Hi Egmat,

I have a small doubt regarding Max value i got 600 as the max value

I have drawn a tree some thing like

--------------A--------------
----B----- ----C--------
-----D---- -- -E-F-G-H-----
-----I----

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

Thank you!

Pl. view this video on RC by Ms. Shraddha Jaiswal- 1 M user on GC contest winner. Hope this helps improve your reading skills. http://www.facebook.com/gmatclubforum?s ... TUNQRK1gIA

-Shalabh
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Intern
Joined: 28 Jan 2012
Posts: 6
Re: A tricky 2 Part Question on Multi Level Marketing (MLM) [#permalink]

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09 Jan 2013, 00:34
So many words
Maximum = 500
Minimum = 200
Re: A tricky 2 Part Question on Multi Level Marketing (MLM)   [#permalink] 09 Jan 2013, 00:34
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