ansumania wrote:In C ; it says the ones who qualify are the ones with the least orders last year.
If that is true there 20% increase in order will be relatively fewer in no. . They would still qualify for the discount .
That would result in loss for the company supplying them.
will someone pl. explain what is wrong with this ?
brijesh wrote:ansumania wrote:In C ; it says the ones who qualify are the ones with the least orders last year.
If that is true there 20% increase in order will be relatively fewer in no. . They would still qualify for the discount .
That would result in loss for the company supplying them.
will someone pl. explain what is wrong with this ?
In argument it is mentioned : Even with much merchandise discounted , sales increased enough to produce a healthy gain in net profits.
So even if as mentioned in option C- (The distributors most likely to qualify for the manufacturer's special discount are those whose orders were unusually low a year earlier.), the no of retailers will be more- to increase the sale and thus the profit.
I think option A, makes better sense.
Well, that makes sense. But the rest of the choices are really kind of unusual in a flaw question. Anyways, interpreted in this fashion, the rest of the choices really make no sense since the plan gives us absolutely no reason to believe in them whatsoever. If one catches the proper interpretation, then, this question is super-simple. Thanks.kevincanspain wrote:It's GMATPrep. We should note that the question asks for a flaw in their plan, and as Testluv explained, that they have offered this discount so recently and successfully makes it impossible for such a plan to achieve its objective. I suppose that GMATPrep considers this a flawed plan since the plan itself gives us reason to believe that E is likely to be true.
I would have thought that too... EXCEPT the argument says "Even with much merchandise discounted , sales increased enough to produce a healthy gain in net profits." So they've already countered the idea that the discount means a loss.They would still qualify for the discount .
That would result in loss for the company supplying them.
will someone pl. explain what is wrong with this ?
All: thanks a lot for your responses. That clarified a lot of doubts for me.Stacey Koprince wrote:Received a PM asking me to respond. I'm not going to read the other responses first, so that I'm not biased.
Q: what is a flaw in the EM's plan? (can also think of this as weakening EM's plan)
EM: wants to boost sales
EM's plan: give special discount to distributors IF orders exceed those for equiv. quarter last year by at least 20%
fact: many distrib did qualify for discount
fact: sales increased, "healthy gain" in net profits (despite discounts)
EM's new plan: repeat "the success" by offering the same discount for the next quarter
Note: "the success" would specifically be: in the fall quarter, get distrib to order at least 20% more than they did in the previous fall quarter, which then leads to gain in sales and net profits. That entire thing represents a "successful plan" - ALL parts of it.
It seems as though the debate above is between A, C and E, so I'll address those.
A) Okay. The argument is concerned with the summer and fall quarters. Information about the spring quarter doesn't help me. Nor does the information make the above plan less likely in any way.
C) Okay. That makes sense: the lower the orders were a year ago, the easier it would be in terms of raw numbers to raise the orders 20%. Does it weaken the plan, though? Does it make it less likely that some distrib will order more? No. Does it prevent or make less likely a gain in sales or net profits? No.
I would have thought that too... EXCEPT the argument says "Even with much merchandise discounted , sales increased enough to produce a healthy gain in net profits." So they've already countered the idea that the discount means a loss.They would still qualify for the discount .
That would result in loss for the company supplying them.
will someone pl. explain what is wrong with this ?
E) Okay. Does this weaken the plan? Hmmm. Yes. It messes up the part that says "get the distributors to order more." If they've already got a bunch of extra merchandise in stock, they aren't going to order as much in this quarter.
)No. That is what you assume about the manufacturer. But that is not the complete argument. The complete argument is "in the fall quarter, get distrib to order at least 20% more than they did in the previous fall quarter, which then leads to gain in sales and net profits." We are trying to address that entire thing, not just the last bit about making a profit. The argument is that profits will increase specifically by getting the distrib to order at least 20% more during the fall quarter.All the manufacturer wants is a big profit.
