Mobiprep has created step by step solution to estimation questions for all product management and consulting interview questions to help you with the mastering placement interviews. So let’s get started with the estimation questions.
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In this estimation question we have analysed the market size of total number of light bulbs currently used in Delhi. Check out the step-by-step answer created by Mobiprep experts.
Estimation Question Step-1: Segmentation
Lets say, we need to estimate only the LED Lamps.
Estimation Question Step-2: Initiation
Now for street lamp, we need to estimate the road network and then assume that say 90% is well lit by lamps. Next we assume a lamp at every 10 meters apart and each street lamp post has two bulbs.
Homes can be estimated by family members. Lets look at this one in larger details.
Number of People in Delhi = 150 Lac people
Avg. number of people per house= 4 to 5
Therefore, 30 lacs to 37.5 lacs , say 35 lac families.
2 LED for Bathroom
2 LED for kitchen
3 LED for bedroom
5 LED for drawing room
Therefore, for 1 BHK = 5 + 3 + 2 + 2 = 12 Lamps
For 2 BHK = 5 + 2 +(2 + 3) + (2 + 3) + 2 = 19 Lamps ~ 20 Lamps
For 3 BHK = 19 + 5 = 24 Lamps ~ 25 Lamps
For 4 BHK = 24 + 5 = 29 Lamps ~ 30 Lamps
Therefore, an apartment say has 40 lamps
Now also, a below poverty line and low income people will refrain from buying an LED (due to its high price)
Also average lamps for 1BHK & 2 BHK be 15 Lamps,
= (0.1 * 15 * 3.15 Lac) + (0.5 * 15 * 14Lac) + (7.7 * 25 + 7.7 * 30 Lac) + (7 * 40Lac)
= 4.725 Lac + 105 Lac + 231Lac + 192.5 Lac + 280 Lac
= 811.225 Lacs
or 8.11 Crores Lamps (For household purposes)
Estimation Question Step-3: Solution
Avg. market revenue for the current year :
-> First time buyer + Repeat Order
Let the economy of Delhi grow by 8% and Let the lamps industry grow by say 10% due to various Govt. Schemes and push for LED Lamps.
(We know that the industry for incandescent lamp and CFL is Shrinking)
First Time buyers = 8.11 * 0.1 Crore
= 0.81 Crores (80 Lacs approx.) -----(a)
Repeat Buyers = 8.11 Crores /Avg. life of the LED
Let Avg. life of LED be 2.5 yrs
= (8.11 * 4 )/ 10 Crores (as 10/4=2.5)
= 3.244 Crores -----(b)
Total = (a) + (b)
= 3.244 Crore + 0.8 Crore
= 4.044 Crore LED Lamps
Further question can be to estimate the revenue of the Industry. Note so for, we have calculated for houses (residential purposes). To estimate the lamps used throughout Delhi, a more rigorous approach is needed.
= 4 Crore * ( 0.3 * 120 + 0.5 * 160 + 0.2 * 200 )
= 4 Crore * ( 36 + 80 + 40 )
= 4 Crore * 156
= 624 Crores
Note again , this is the estimate of residential use only.