Hi EMPOWERgmatVerbal.
I wanted to understand why did not you include the plane discount benefit that is realised when chosing the standard process than the ROB strategy. (plane discount benefit + reimbursement ) > (4* (block price - non block price)
Requesting your kind response, my exam is in 5 days. please help
EMPOWERgmatVerbal
Sajjad1994
Project IR Butler 2019-20 - Get one IR Question EverydayQuestion # 201, Date : 20-Apr-2020
This post is a part of Project IR Butler 2019-20.
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Seven spring break destinations are offered for spring break tourists from Partee University. For each destination, the table lists the plane ticket price, the discounted plane ticket price (if any), the spring break operator, the rate for a waterfront beach house in the block area, and the lowest rate for a waterfront beach house. Spring break traveler groups will require 4 nights of lodging and all beach house rates are per night and per group. All plane ticket prices are also per group of up to six passengers. Each group has no more than six people as there are 6 beds in each beach house. The lowest rate for an available beach house outside of the waterfront is $70.
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The waterfront beach houses are organized in 3 rows. The spring break company has set aside a block of beach houses (the first row along the waterfront) for its clients; the availability is at a higher-than-normal rate for the waterfront beach houses.
While most spring breakers prefer to stay in beach houses in the waterfront area, they often follow an alternate strategy to avoid the extra cost of reserving a house. Some attendees reserve houses outside the waterfront area - ROWFA strategy. Others reserve beach houses outside the block - ROB strategy - and get a row 2 or row 3 waterfront beach house instead.
Spring break operators have succeeded in curbing the frequency of these alternatives by increasing the plane ticket by a fixed amount and then offering an equivalent planet ticket price discount to spring breakers who book rooms in the front waterfront block. A study has shown that if this plane ticket discount is equal to at least half the potential savings of a spring breaker's particular cost-saving strategy, the spring breaker is much more likely to reserve a beach house within the first row of the waterfront block.
1. Jill and her friends are planning a 5-day/4-night spring break trip to Cancun. Their group has 10 people and they want to stay in the first block of the waterfront area. What is the total cost for Jill and her friends traveling from Partee University?A. $500
B. $950
C. $1000
D. $1900
E. $5000
2. For each of the following destinations, select Yes if a spring break traveler group would spend more money by employing the ROB strategy -- paying the lowest possible waterfront beach house rate in the waterfront area and paying the nondiscounted plane ticket price -- than by reserving a beach house in the first row of the waterfront block. Otherwise, select No.
Yes | No | Statements |
| | Cancun |
| | Jamaica |
| | Miami |
Assume that all beach houses at the waterfront are available for the 4 days indicated and all beach houses in the city are available at their lowest rates during these 4 days.
3. Which one of the following destinations is most likely to have spring break travelers favoring the ROB strategy over the ROWFA strategy?A. Hawaii
B. Jamaica
C. Daytona
D. Miami
E. Bahamas
Assume that spring break operators receive a reimbursement from the waterfront beach housing organization (which owns the waterfront beach houses) for 25% of the front row block rate for each unoccupied beach house in the front row block of the waterfront area.
4. For each of the following spring break operators, select Yes if the spring break operator would lose beach house revenue if a room in the block is vacant because a traveler group employed the ROB strategy. Otherwise, select No.
Yes | No | Statements |
| | Contiki |
| | WorldSprings |
| | SunFun |
5. Select Yes if the percentage discount on the plane ticket (compared to the original price) exceeds the percentage discount for reserving the lowest rate beach house in the waterfront area (compared to the block rate in the waterfront area). Otherwise, select No.
Yes | No | Statements |
| | Miami |
| | Hawaii |
| | Cancun |
6. For each of the following spring break destinations, select Yes if a spring break traveler going for the 4-night package would spend less money by employing the ROWFA strategy -- paying the lowest possible beach house rate outside the waterfront area and paying the non-discounted plane ticket price -- than by reserving a front row beach house in the block. Otherwise, select No.
Yes | No | Statements |
| | Cancun |
| | Daytona |
| | Puerto Rico |
7. Many individuals stand to benefit financially from spring breakers coming out for their vacations. For each of the following individuals, choose Gain if the individual would likely earn more money if beach houses in the front row block are vacant because of attendees using ROWFA strategies. Otherwise select No Gain.
Yes........ | No........ | Statements |
| | Rap artist hired to throw a concert alongside the waterfront beach houses. |
| | Morning breakfast delivery by a delivery waitress at the beach house whose earnings are primarily from gratuities. |
| | Taxi cab driver bringing guests from outside of the waterfront area to the waterfront area where vacationers tend to hangout. |
Assume that for the four nights that spring break travelers stay, beach houses outside the waterfront area are available at their lowest rate.
8. For the following cities, select Yes if spring break traveler groups would be more likely to reserve a beach house in the front row of the waterfront block than getting a beach house outside the waterfront area. Otherwise, select No.
Yes | No | Statements |
| | Miami |
| | Jamaica |
| | Cancun |
We can crush these questions swiftly and accurately and outperform other test-takers with strategic and tactical thinking.
Question 1:Check out the options. Notice how spread out the options are? That tells you that we can beat other test takers through simple rounding and estimation:
Since the group has 10 people, they need two beach houses. Estimate total costs for lodging and plane tickets without exact calculations:
- Lodging: Block rate (around $150) * 4 nights * 2 houses = around $1200
- Plane tickets: Discounted price (around $350) * 2 groups = around $700
Total cost is roughly $1900, which is closer to option D.
Answer: D. $1900Question 2:Zoom out, gain perspective on the data. For each destination, simply compare the total costs of ROB and block rate strategies (lodging + plane tickets):
- Cancun: ROB total cost ($120 * 4 + $480) is greater than block rate total cost ($150 * 4 + $330); answer Yes
- Jamaica and Miami have lower ROB total costs; answer No for both
Answer: Yes for Cancun, No for Jamaica, No for MiamiQuestion 3:Quickly eliminate Daytona, Miami, and Bahamas as their plane ticket discounts are smaller compared to Hawaii or Jamaica. Compare the differences between block rates and lowest waterfront rates for Hawaii and Jamaica. Hawaii's difference ($140 - $115 = $25) is smaller than Jamaica's ($160 - $135 = $25). So, most likely, travelers would favor the ROB strategy in Hawaii.
Answer: A. HawaiiQuestion 4:Compare potential loss due to ROB strategy with the reimbursement received by spring break operators (25% of front row block rate):
- Contiki (Miami): Reimbursement ($100) is less than loss due to ROB strategy ($120); answer Yes
- WorldSprings (Hawaii) and SunFun (Bahamas): Reimbursements are greater than losses due to ROB strategies; answer No for both
Answer: Yes for Contiki, No for WorldSprings, No for SunFunQuestion 5:Drawing on our skill in looking for patterns or relationships in the data, compare the ratios of price differences for plane tickets and beach houses. For Cancun, the plane ticket price difference ($480 - $330) is greater than the beach house price difference ($150 - $120). This indicates that Cancun's plane ticket discount percentage is higher.
Answer: No for Miami, No for Hawaii, Yes for CancunQuestion 6:Focus on destinations with higher block rates as more likely candidates for ROWFA strategies being more cost-effective. With a quick comparison of total costs (lodging + plane tickets), it becomes clear that all three destinations (Cancun, Daytona, Puerto Rico) have lower costs with ROWFA strategies.
Answer: Yes for Cancun, Yes for Daytona, Yes for Puerto RicoQuestion 7:We can just use common sense to analyze how individuals' earnings might be affected by attendees staying outside the waterfront area. Check it out:
- Rap artist: concert location doesn't change; no gain
- Delivery waitress: fewer deliveries; no gain
- Taxi cab driver: increased transportation needs; gain
Answer: No Gain for Rap artist, No Gain for Delivery waitress, Gain for Taxi cab driverQuestion 8:More common sense: if the plane ticket discount is equal to or greater than half of potential savings from staying outside the waterfront area (ROWFA strategy), travelers are more likely to choose front row beach houses. With this logic in mind:
- Miami's answer is Yes (discount equals half of potential savings)
- Jamaica and Cancun have lower total costs with ROWFA strategies, so the answer is No for both.
Answer: Yes for Miami, No for Jamaica, No for CancunBigger GMAT PerspectiveCompare that to the long, non-strategic approach below (to be avoided---the test-writers want to measure accuracy/time so that requires strategic insight, and frequently you can use the options themselves to clue you in). Why do they do this? Anyone can slog through the calculations. These standardized test questions reward strategic and tactical test-takers given the test's time constraints.
Question 1:Jill and her friends are planning a 5-day/4-night spring break trip to Cancun. Their group has 10 people, so they will need two beach houses (each beach house has 6 beds).
Step 1: Calculate the total plane ticket price for both groups of travelers (2 groups, each up to six passengers).
Total plane ticket price = Discounted Ticket price * Number of traveler groups
Total plane ticket price = $350 * 2 = $700
Step 2: Calculate the lodging cost for one beach house in the first block of the waterfront area.
Lodging cost = Block rate * Number of nights
Lodging cost = $150 * 4 = $600
Step 3: Calculate the total lodging cost for two beach houses (since there are 10 people, they will need two beach houses).
Total lodging cost = Lodging cost per beach house * Number of beach houses
Total lodging cost = $600 * 2 = $1200
Step 4: Calculate the total cost for Jill and her friends' trip.
Total cost = Total lodging cost + Total plane ticket price
Total cost = $1200 + $700
Total cost =$1900
So, answer choice D. $1900 is correct.
Question 2:We need to find out if spring break traveler groups would spend more money by employing the ROB strategy than by reserving a beach house in the first row of the waterfront block for Cancun, Jamaica, and Miami.
For Cancun:
ROB strategy total cost (lodging + non-discounted plane tickets)
= (Lowest waterfront rate * 4 nights) + Non-discounted plane ticket price
= ($120 * 4) + $480 = $960
Block rate total cost (lodging + discounted plane tickets)
= (Block rate * 4 nights) + Discounted plane ticket price
= ($150 * 4) + $330 = $930
Since the ROB strategy total cost ($960) is higher than the block rate total cost ($930), the answer for Cancun is Yes.
For Jamaica:
ROB strategy total cost
= (Lowest waterfront rate * 4 nights) + Non-discounted plane ticket price
= ($135 * 4) + $220 = $760
Block rate total cost
= (Block rate * 4 nights) + Discounted plane ticket price
= ($160 * 4) + $200 = $840
Since the ROB strategy total cost ($760) is lower than the block rate total cost ($840), the answer for Jamaica is No.
For Miami:
ROB strategy total cost
= (Lowest waterfront rate * 4 nights) + Non-discounted plane ticket price
= ($70 * 4) + $210 = $490
Block rate total cost
= (Block rate * 4 nights) + Discounted plane ticket price
= ($100 * 4) + $150 = $550
Since the ROB strategy total cost ($490) is lower than the block rate total cost ($550), the answer for Miami is No.
So, the final answers are Yes, No, and No for Cancun, Jamaica, and Miami respectively.
Question 3:We need to find out which destination is most likely to have spring break travelers favoring the ROB strategy over the ROWFA strategy.
Step 1: Calculate potential savings from ROWFA and ROB strategies for each destination.
For Hawaii:
ROWFA savings: (Block rate * 4 nights) + Discounted plane ticket price - ((Lowest rate outside waterfront) * 4 nights + Non-discounted plane ticket price)
= ($140 * 4) + $450 - (($70 * 4) + $525) = $95
ROB savings: (Block rate * 4 nights) + Discounted plane ticket price - ((Lowest waterfront rate) * 4 nights + Non-discounted plane ticket price)
= ($140 * 4) + $450 - (($115 * 4) + $525) = $25
For Jamaica:
ROWFA savings: ($160 * 4) + $200 - (($70 * 4) + $220)=80
ROB savings: ($160 * 4)+$200-(($135*4)+$220)=40
For Daytona:
ROWFA savings: ($135*4)+$170-(($70*4)+$200)=110
ROB savings: ($135*4)+$170-(($100*4)+$200)=30
For Miami:
ROWFA savings: ($100*4)+$150-(($70*4)+$210)=60
ROB savings: ($100*4)+$150-(($70*4)+$210) = 60
For Bahamas:
ROWFA savings: ($115*4)+$210-(($70*4)+$240)=50
ROB savings: ($115*4)+$210-(($90*4)+$240)=10
Among all the destinations, Hawaii has the highest ROB savings ($25) compared to ROWFA savings ($95). Therefore, the answer is A. Hawaii.
Question 4:We need to determine if the spring break operator would lose beach house revenue if a room in the block is vacant because a traveler group employed the ROB strategy for Contiki, WorldSprings, and SunFun.
Since spring break operators receive a reimbursement from the waterfront beach housing organization for 25% of the front row block rate for each unoccupied beach house in the front row block of the waterfront area, we will calculate this reimbursement and compare it with potential loss due to ROB strategy.
For Contiki (Miami):
Reimbursement: 0.25 * Block rate * 4 nights = 0.25 * $100 * 4 = $100
Loss due to ROB strategy: (Block rate * 4 nights) - (Lowest waterfront rate * 4 nights) = ($100 * 4) - ($70 * 4) = $120
Since reimbursement ($100) is less than loss due to ROB strategy ($120), Contiki would lose beach house revenue. The answer is Yes for Contiki.
For WorldSprings (Hawaii):
Reimbursement: 0.25 * Block rate * 4 nights = 0.25 * $140 * 4 = $140
Loss due to ROB strategy: (Block rate * 4 nights) - (Lowest waterfront rate * 4 nights) = ($140 * 4) - ($115 * 4) = $100
Since reimbursement ($140) is greater than loss due to ROB strategy ($100), WorldSprings would not lose beach house revenue. The answer is No for WorldSprings.
For SunFun (Bahamas):
Reimbursement: 0.25 * Block rate * 4 nights = 0.25 * $115 * 4 = $115
Loss due to ROB strategy: (Block rate * 4 nights) - (Lowest waterfront rate * 4 nights) = ($115 * 4) - ($90 * 4) = $100
Since reimbursement ($115) is greater than loss due to ROB strategy ($100), SunFun would not lose beach house revenue. The answer is No for SunFun.
So, the final answers are Yes, No, and No for Contiki, WorldSprings, and SunFun respectively.
Question 5:We need to determine if the percentage discount on the plane ticket (compared to the original price) exceeds the percentage discount for reserving the lowest rate beach house in the waterfront area (compared to the block rate in the waterfront area) for Miami, Hawaii, and Cancun.
For Miami:
Percentage discount on plane ticket: (($210-$150)/$210)*100=28.57%
Percentage discount on beach house: (($100-$70)/$100)*100=30%
Since plane ticket discount (28.57%) is less than beach house discount (30%), the answer is No for Miami.
For Hawaii:
Percentage discount on plane ticket: (($525-$450)/$525)*100=14.29%
Percentage discount on beach house: (($140-$115)/$140)*100=17.86%
Since plane ticket discount (14.29%) is less than beach house discount (17.86%), the answer is No for Hawaii.
For Cancun:
Percentage discount on plane ticket: (($480-$330)/$480)*100=31.25%
Percentage discount on beach house: (($150-$120)/$150)*100=20%
Since plane ticket discount (31.25%) is greater than beach house discount (20%), the answer is Yes for Cancun.
So, the final answers are No, No, and Yes for Miami, Hawaii, and Cancun respectively.
Question 6:We need to determine if a spring break traveler going for the 4-night package would spend less money by employing the ROWFA strategy than by reserving a front row beach house in the block for Cancun, Daytona, and Puerto Rico.
For Cancun:
ROWFA total cost: (Lowest rate outside waterfront * 4 nights) + Non-discounted plane ticket price = ($70 * 4) + $480 = $760
Block rate total cost: (Block rate * 4 nights) + Discounted plane ticket price = ($150 * 4) + $330 = $930
Since ROWFA total cost ($760) is less than block rate total cost ($930), the answer is Yes for Cancun.
For Daytona:
ROWFA total cost: (Lowest rate outside waterfront * 4 nights) + Non-discounted plane ticket price = ($70 * 4) + $200 = $480
Block rate total cost: (Block rate * 4 nights) + Discounted plane ticket price = ($135 * 4) + $170 = $710
Since ROWFA total cost ($480) is less than block rate total cost ($710), the answer is Yes for Daytona.
For Puerto Rico:
ROWFA total cost: (Lowest rate outside waterfront * 4 nights) + Non-discounted plane ticket price = ($70 * 4) + $425 = $705
Block rate total cost: (Block rate * 4 nights) + Discounted plane ticket price = ($200 * 4) + $400 = $1200
Since ROWFA total cost ($705) is less than block rate total cost ($1200), the answer is Yes for Puerto Rico.
So, the final answers are Yes, Yes, and Yes for Cancun, Daytona, and Puerto Rico respectively.
Question 7:We need to determine if individuals would likely earn more money if beach houses in the front row block are vacant because of attendees using ROWFA strategies for a rap artist, a delivery waitress, and a taxi cab driver.
Rap artist:
Since the rap artist is hired to throw a concert alongside the waterfront beach houses, their earnings would not be affected by attendees staying outside of the waterfront area. Therefore, there would be no gain for the rap artist. The answer is No Gain.
Delivery waitress:
If more attendees stay outside the waterfront area, it could potentially reduce the number of breakfast deliveries and gratuities for the delivery waitress. Therefore, there would be no gain for the delivery waitress. The answer is No Gain.
Taxi cab driver:
If more attendees stay outside of the waterfront area and require transportation to the waterfront area where vacationers tend to hang out, this could increase business for taxi cab drivers. Therefore, there would be a gain for taxi cab drivers. The answer is Gain.
So, the final answers are No Gain, No Gain, and Gain for Rap artist, Delivery waitress, and Taxi cab driver respectively.
Question 8:We need to determine if spring break traveler groups would be more likely to reserve a beach house in the front row of the waterfront block than getting a beach house outside of the waterfront area for Miami, Jamaica, and Cancun.
For Miami:
ROWFA total cost: (Lowest rate outside waterfront * 4 nights) + Non-discounted plane ticket price = ($70 * 4) + $210 = $490
Block rate total cost: (Block rate * 4 nights) + Discounted plane ticket price = ($100 * 4) + $150 = $550
Since ROWFA total cost ($490) is less than block rate total cost ($550), it might seem that the answer should be No for Miami. However, according to the article, if the plane ticket discount is equal to at least half the potential savings of a spring breaker's particular cost-saving strategy, the spring breaker is much more likely to reserve a beach house within the first row of the waterfront block. In this case, the plane ticket discount ($60) is equal to half of the potential savings ($60), so Miami should be Yes.
For Jamaica:
ROWFA total cost: (Lowest rate outside waterfront * 4 nights) + Non-discounted plane ticket price = ($70 * 4) + $220 = $500
Block rate total cost: (Block rate * 4 nights) + Discounted plane ticket price = ($160 * 4) + $200 = $840
Since ROWFA total cost ($500) is significantly less than block rate total cost ($840), and considering that the plane ticket discount of $20 is not at least half of the potential savings of $340, spring break traveler groups would likely choose a beach house outside of the waterfront area. The answer is No for Jamaica.
For Cancun:
ROWFA total cost: (Lowest rate outside waterfront * 4 nights) + Non-discounted plane ticket price = ($70 * 4) + $480 = $760
Block rate total cost: (Block rate * 4 nights) + Discounted plane ticket price = ($150 * 4) + $330 = $930
Similar to Jamaica, since ROWFA total cost ($760) is significantly less than block rate total cost ($930), and considering that the plane ticket discount of $150 is not at least half of the potential savings of $170, spring break traveler groups would likely choose a beach house outside of the waterfront area. The answer is No for Cancun.
So, the final answers are Yes, No, and No for Miami, Jamaica, and Cancun respectively.