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

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**3 expert replies** and **3 member replies**

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

* Sun Dec 16, 2012 11:59 pm*
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

* Tue Dec 18, 2012 6:16 am*
* Tue Dec 18, 2012 9:09 pm*
**Milan wrote:**Minimum-100

Maximum-600

Hi Milan,

I am afraid this is not the correct answer.Pl. apply logic on how to allocate associates to Level 1 & 2 associates.

-Shalabh

* Wed Dec 19, 2012 5:17 am*
Hey Guys,

My answer:

Minimum : 200 (I tried maximizing one branch under Pat thus calculation is 900 -700 =200)

Maximum : 500 (I tried minimizing one branch under Pat thus calculation is 900 -400 =200)

Regards,

Ashu

**e-GMAT wrote:**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

* Fri Jan 04, 2013 1:03 am*
[quote="ashut27"]Hey Guys,

My answer:

Minimum : 200 (I tried maximizing one branch under Pat thus calculation is 900 -700 =200)

Maximum : 500 (I tried minimizing one branch under Pat thus calculation is 900 -400 =200)

Regards,

Ashu

[quote="

e-GMAT"]Hi folks,

Hi ashut,

That's the correct answer.

Meanwhile, dont forget to attend the SC session on Saturday. Please find the link below:

-Shalabh

* Sat Jan 12, 2013 3:01 am*
Can anyone explain what this problem is talking about?

I'm very confused...

I read the problem as:

pat's commission points = "total cumulative points of all his associates" - "max commutative points of one of his associate groups"

And for his hierarchy:

2x lv 1 associates

10x lv 2 associates (assume 5 in each branch)

1x lv 3 associate

so total of 13 associates under Pat...

I don't understand how someone gets (900 - 700)...

Please help... Thanks!

* Sun Jan 13, 2013 11:27 pm*
**Perfectus wrote:**Can anyone explain what this problem is talking about?

I'm very confused...

I read the problem as:

pat's commission points = "total cumulative points of all his associates" - "max commutative points of one of his associate groups"

And for his hierarchy:

2x lv 1 associates

10x lv 2 associates (assume 5 in each branch)

1x lv 3 associate

so total of 13 associates under Pat...

I don't understand how someone gets (900 - 700)...

Please help... Thanks!

Hi Perfectus,

Pl. see this image. Hope it helps. There are collectively 5 associates in level 2.

-Shalabh