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An eyeglass manufacturer tried to boost sales for the summer

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Re: An eyeglass manufacturer tried to boost sales for the summer  [#permalink]

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New post 13 Aug 2017, 07:15
An eyeglass manufacturer tried to boost sales for the summer quarter by offering its distributors a special discount if their orders for that quarter exceeded those for last year's summer quarter by at least 20 percent. Many distributors qualified for this discount. Even with much merchandise discounted, sales increased enough to produce a healthy gain in net profits. The manufacturer plans to repeat this success by offering the same sort of discount for the fall quarter.

Which of the following, if true, most clearly points to a flaw in the manufacturer's plan to repeat the successful performance of the summer quarter?

(A) Out of scope dealing with summer and spring when we are trying to weaken success of offering same discount during fall quarter.
(B) This does not specifically have anything to do with weakening the repeat of discount success.
(C) Irrelevant to fall & summer quarters.
(D) Irrelevant.

(E) This suggests that the 'success' was attributable to something other than discounts i.e. over-stocking during the summer (natural assumption that the discounts drove distributors' to purchase more goods in the summer), weakening the ability to repeat same success in fall quarter.

Hope this is understandable!
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Re: An eyeglass manufacturer tried to boost sales for the summer  [#permalink]

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New post 25 Apr 2018, 04:20
VeritasPrepKarishma, GMATNinja, egmat
Why specifically option E is better than C?
My confusion is that option C suggests that the increase in the sales number of manufacturer would be less since 20% of small quantity (quantum of sales done by eligible Retailers) would be less and from the argument, it is evident that in the summer quarter, the quantum of sales was so much as to offset the discount effect.
Option E suggests that most of the retailers wont avail the manufacturer's discount in fall quarter as they already have inventories left.

Hence, my doubt is how option e has an edge over c?
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Re: An eyeglass manufacturer tried to boost sales for the summer  [#permalink]

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New post 25 Apr 2018, 10:20
gmatacer40 wrote:
VeritasPrepKarishma, GMATNinja, egmat
Why specifically option E is better than C?
My confusion is that option C suggests that the increase in the sales number of manufacturer would be less since 20% of small quantity (quantum of sales done by eligible Retailers) would be less and from the argument, it is evident that in the summer quarter, the quantum of sales was so much as to offset the discount effect.
Option E suggests that most of the retailers wont avail the manufacturer's discount in fall quarter as they already have inventories left.

Hence, my doubt is how option e has an edge over c?

Even if (C) is true, the manufacturer's plan already worked for the summer. So even though orders were unusually low last year summer, the plan still increased profits from those distributors. The same could be true in the fall. Distributors whose orders were low last fall might increase their orders because of the discount this fall.

Regardless of the number of orders, the plan can still cause a healthy gain in profits if sales are boosted by more than 20%.
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Re: An eyeglass manufacturer tried to boost sales for the summer  [#permalink]

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New post 26 Apr 2018, 09:30
GMATNinja wrote:
gmatacer40 wrote:
VeritasPrepKarishma, GMATNinja, egmat
Why specifically option E is better than C?
My confusion is that option C suggests that the increase in the sales number of manufacturer would be less since 20% of small quantity (quantum of sales done by eligible Retailers) would be less and from the argument, it is evident that in the summer quarter, the quantum of sales was so much as to offset the discount effect.
Option E suggests that most of the retailers wont avail the manufacturer's discount in fall quarter as they already have inventories left.

Hence, my doubt is how option e has an edge over c?

Even if (C) is true, the manufacturer's plan already worked for the summer. So even though orders were unusually low last year summer, the plan still increased profits from those distributors. The same could be true in the fall. Distributors whose orders were low last fall might increase their orders because of the discount this fall.

Regardless of the number of orders, the plan can still cause a healthy gain in profits if sales are boosted by more than 20%.


GMATNinja
You have mentioned "So even though orders were unusually low last year summer". However, I am not able to deduce this specific information from the argument. According to me, if we take option C as true, it would talk about only fall quarter. So, we dont know whether orders were lw for summer quarter. please explain.
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Re: An eyeglass manufacturer tried to boost sales for the summer  [#permalink]

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New post 28 Apr 2018, 01:40
Experts mikemcgarry GMATNinja VeritasPrepKarishma egmat Please guide for this question.......I marked Option B as increased newspaper and advertising costs shall have a direct impact on net profit which is not considered in the argument.
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Re: An eyeglass manufacturer tried to boost sales for the summer  [#permalink]

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New post 31 May 2018, 23:36
If the closing stock for summer quarter will become the opening stock for fall quarter then will the distributors stock more if they are already overstocked?.

Since it is mentioned in the question stem that "Many distributors qualified for this discount.", means many distributors might not avail the discount as they are already over stocked.

Option E is the correct choice!! "The distributors' ordering more goods in the summer quarter left them overstocked for the fall quarter".
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Re: An eyeglass manufacturer tried to boost sales for the summer  [#permalink]

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New post 17 Jul 2018, 01:23
GMATNinja , @VeritasPrepKarishma , egmat - Request your help in understanding why the option E is better than option B in this question.

My thinking
B- If the manufacturer had put inputs other than the discounts then they might have had an impact on sales & hence we cannot assume that the same similar growth in sale will happen in fall quarter- given that it is specified that manufacturer plans to repeat the same discount but is not mentioned that other inputs will also be repeated
E- The distributors are overstocked for fall, but might choose to be even more overstocked. It might not necessarily result in failure of the plan.

Your help in understanding will be much appreciated.
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Re: An eyeglass manufacturer tried to boost sales for the summer  [#permalink]

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New post 07 Oct 2018, 10:00
A) In general, a distributor's orders for the summer quarter are no higher than those for the spring quarter.
is not indicating any hint that will lead to paradox

(B) Along with offering special discounts to qualifying distributors, the manufacturer increased newspaper and radio advertising in those distributors' sales areas.
it means just probability of high sales is very high. but doesnot generate any doubt

(C) The distributors most likely to qualify for the manufacturer's special discount are those whose orders were unusually low a year earlier.
this is basically the same point mentioned in the passage. hence nothing imp

(D) The distributors who qualified for the manufacturer's special discount were free to decide how much of that discount to pass on to their own customers.
it doesnot relate to profit of manufacturer. hence not a relevant

(E) The distributors' ordering more goods in the summer quarter left them overstocked for the fall quarter.
if overstocked, there is a high chance that the price will fall. this will affect the net profit even if sales increases. hence
giving discount makes no sense to manufacturers!!
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Re: An eyeglass manufacturer tried to boost sales for the summer &nbs [#permalink] 07 Oct 2018, 10:00

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