Pallas Pharma: This Market Size Looks Too Big
Consulting
hard35 min0 submissionsGoldman Sachs
Scenario
A junior consultant has sized the annual replacement market for a household appliance in US. The number is being used to justify a $95 M capacity investment.
Their working, verbatim
Population is 260m. Average household size is 3, so there are about 87m households.
Penetration of this appliance is 20%.
Appliances are replaced every 4 years.
So annual replacement demand = 260m × 20% ÷ 4 = 13.0m units per year.
At $1700 per unit, that is a market of roughly $22,100 M a year.
The partner has asked you to check it before it goes in the deck.
Supporting data
derived hints
- corrected units m
- 4.3
- overstatement multiple
- 3
stated working
- households m
- 87
- population m
- 260
- household size
- 3
- price per unit
- 1700
- stated units m
- 13
- penetration pct
- 20
- replacement years
- 4
Your task
Check the estimate. Your answer should provide:
- Analysis — find the error and quantify how much it distorts the answer.
- Risks — what depends on this number being right.
- Recommendation — the corrected size, computed, and how you would sanity-check it.
State any assumptions you make.
Ready to move forward? Up next: Marlow Chemicals: Pressure-Test This RecommendationNext question
How you'll be graded
100 points, 60% to pass.
- explanation20
- residual review15
- error identification35
- quantitative correction30
Hint
Reveal suggested structure
Unit consistency; households vs individuals; recompute; sanity-check against a known anchor