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13 Aug 2017, 08:15
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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!
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!
25 Apr 2018, 05:20
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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?
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?
25 Apr 2018, 11:20
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gmatacer40
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%.
