Riddle of the day! Sharpen your brain

Great initiative jkolachi!

I came up with a different approach, only to realize i made an addition mistake and i missed a 2 somewhere, resulting into a longer time. This is definitely a good exercise for both out-of-the box thinking and attention too!

One of my Econ professors used to stumble challenge us at the beginning of every class and asking everyday questions which were pretty tough. For example, one of his questions was (this is somewhat American as these may not exist in all countries) but the question is - what is the point of rebates? As an example, why do car manufacturers offer rebates?

Lol bb i made a similar mistake and couldn't solve this simple riddle. That's an interesting question, my high school stats teacher used to do the same. Not sure about rebates but assuming it has something to do with increasing cash flow/revenue since often people don't even claim the rebates and are more likely to buy products that offer rebates?? Would love to hear the actual reasons behind this.

I will let it "brew" for a day or maybe even over the weekend and reply the, if you don't mind. Hoping to suck more people in....

Rebates encourage people to shop more. If people purchase an item for 100 USD and get a rebate of 10 USD, people do not let go the 10 USD they get as rebate in their account. They wish to make use of the 10 USD and purchase again for 100 USD or more. Also, at the point of 2nd purchase, if there are 2 comparatively similar items A (100 USD) and B (110 USD) people tend to buy the item having the price 110 USD as they think that they can get a 110 USD item at 100 USD. This is a good deal for shoppers as well as manufacturers because the margins are more when the item is priced higher. So a small rebate can trigger a cycle of events that would be beneficial to a manufacturer in a number of ways. This is my thinking. Eager to hear from you as well.

Hi jkolachi,

When I say how much it will help, I mean it will depend on each person.
Someone in tight schedule may as well look at probability Q and find 'out of box' thinking while doing such Qs and thus increase his reasoning while doing actual GMAT Q's. But he too should do something to break daily routine.
Someone who has time with him can ofcourse develop his reasoning by doing riddles and puzzles.

So it is great if you can up with new and exciting riddles. I for one enjoy them thoroughly and that's why was the first to try your riddle.

People tend to fall for this particular marketing strategy. The firms don't loose anything since the marked price of the product is marked in such a way that the firms don't incur loss. Also, specifically in case of car market, there are cartels, so the prices of the cars are competitive and hence don't vary much; therefore, people tend to buy that product which "seems" to be marked lower as compared to the other product.

Please let me know if my answer is anywhere near the correct answer bb.

Also, thanks jkolachi for such initiative. I missed out the simple scenario which chetan2u had pointed out. I am looking forward to your everyday quiz questions.

I will give a tip, and please don't feel bad at all trying. This puzzle was NOT cracked by a whole class of first-year MBA students. So far you are doing as good as them and I.

Here is a tip, while your comments about sales and marketing are indeed benefits of rebates, it is not the main driver. This is one of those questions you have to think about it from several sides. You may be able to crack it if you consider how discounts and rebates are different.

I am going to leave it at this. I will post another tip in about 12 hours if this is still not cracked by then. Good luck!




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I got 17 minutes so no they cannot cross? Main pt is they cannot cross without the torch.

8 crosses over with 1. Time =8
1 goes back. T =9
1 brings back 5 with him T= 14
1 goes back T =15
1 brings back 2 with him T=17



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bb I think it's got more to do with psychology. If people feel like they are getting something of value back, they are more likely to buy it. It makes them feel as if getting something that is theirs back is better than keeping it to themselves to begin with.... It's one of those cognitive fallacies our brains fall for....

Is this more along those lines?

Tip #2 surprisingly it has little to do with consumers .


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I would say that providing rebates to the people will maximise the chances that the people will shop till they reach atleast the threshold. By doing so people are tempted to shop till the threshold in order to get the refund. This mostly helps in improving the revenues rather than the sales.

Awaiting further tips if my answer is still incorrect.

hi they can go at 15 min. my go is first 1 and 2 cross the bridge. then 1 comes back (3). 5 and 8 cross the bridge (11) 2 comes back to pick 1. (13). both 1 and 2 cross the bridge (15).

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Reply if anything wrong with my answer process.

Dont beg for kudos - does not look good.

kk gotcha.

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Here is the answer to the rebate puzzle/question: the key is the supply chain. Just in case there is someone who is not very familiar with Rebates - these usually come in a form of a mail-in rebate - you have to mail your receipt and a part of product packaging that would grant you 1 rebate per product purchased. Here is a bit of a high level overview for a weekend reading. If you are impatient, skip to step 3.

1. For a consumer there is almost no difference between a rebate and a discount. The main difference is that rebate works like a delayed discount (you have to mail it in and you have to wait a few weeks/months to get your check via mail). There are of course those situations when people forget to mail them, or don't get the check back, or are denied a rebate for some minor detail. Outside of those several scenarios that impact probably less than 20% of consumers, rebate and discount are identical.

2. For a manufacturer, a rebate is similar to a discount as well in a number of ways - it is reduction of a price on a product and it costs them money to process (open mail, verify, and mail checks back) so whatever they gain by people forgetting to mail rebates in, they lose on the processing side. Rebates have an additional benefit and sometimes allow companies to delay discounting and inflate revenue at the end of a year.

3. However, very few of us buy cars, TV's, or electronics directly from a manufacturer. We usually get them from a car dealer, Electronics store or and online retailer. Here is where the big difference comes in - relationship between manufacturer and distributors, esp. independent ones. Rebates allow manufacturers to pass savings directly to the consumer, cutting out the middle man. There are a number of reasons they may want to do that. The best example and the one my professor used was a car dealership. Let's assume Ford came out with a new $40K electric car that they sell to dealers for $35K. It is a gamble and Ford is asking thousands of independent Ford dealers to support it. Loyal dealers agree to support and commit to buying hundreds of cars at $35K to put into their show rooms. The not so loyal ones, decide to wait and see.

Now, let's say that particular car is not selling well - only 10,000 sold in a year but Ford already made 100,000 of them and the loyal dealers had bought 50,000. Dealers want to get rid of the inventory since it takes up space and costs interest on financing but they don't want to lose money on a bad car Ford made. Ford wants to get rid of the inventory too, and their research shows that they can sell them all at $30K to consumers, which means the dealer price needs to be $25K. If Ford discounts the car down to $25K for dealers, then all the non-loyal dealers will jump on the deal and make a bunch of money and the ones who agreed to support Ford will be stuck with $35K cars, resulting into 5K loss per car (Ford will quickly run out of loyal dealers). However, if Ford issues a $10,000 rebate to consumers, then the Loyal dealers can still sell their cars for $40K each and make money, and the not-so loyal dealers want to get in on the action, they will still have to pay the same old $35K price per car to buy them.

Ultimately rebates are pricing mechanisms that allow manufacturers to reward loyal distributors and maintain price parity across the distribution channels.

PS. This is a good example (I think) of an everyday situation that requires thinking outside of the box.

But bb in this process won't the loyal dealers anyways suffer because the consumers will buy the cars directly from ford at a lower price rather than going to the loyal dealers. So what is the point of rebate? Is it just to keep the relations healthy?