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

This topic has 3 expert replies and 3 member replies

### GMAT/MBA Expert

e-GMAT GMAT Instructor
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#### 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

Perfectus Newbie | Next Rank: 10 Posts
Joined
27 Dec 2012
Posted:
7 messages
Sat Jan 12, 2013 3:01 am
Can anyone explain what this problem is talking about?

I'm very confused...

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)...

### GMAT/MBA Expert

e-GMAT GMAT Instructor
Joined
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Sun Jan 13, 2013 11:27 pm
Perfectus wrote:
Can anyone explain what this problem is talking about?

I'm very confused...

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)...

Hi Perfectus,

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

-Shalabh

BTG14 Senior | Next Rank: 100 Posts
Joined
06 Apr 2012
Posted:
45 messages
3
Target GMAT Score:
680
GMAT Score:
500
Tue Dec 18, 2012 6:16 am
Minimum-100
Maximum-600

### GMAT/MBA Expert

e-GMAT GMAT Instructor
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Posted:
626 messages
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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

ashut27 Newbie | Next Rank: 10 Posts
Joined
07 Feb 2012
Posted:
1 messages
Wed Dec 19, 2012 5:17 am
Hey Guys,

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

### GMAT/MBA Expert

e-GMAT GMAT Instructor
Joined
26 Jul 2010
Posted:
626 messages
Followed by:
224 members
527
Fri Jan 04, 2013 1:03 am
[quote="ashut27"]Hey Guys,

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,

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

-Shalabh

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