Northwind Energy: This Market Size Looks Too Big
Consulting
easy35 min0 submissionsGoldman Sachs
Scenario
A junior consultant has sized the annual replacement market for a household appliance in Europe. The number is being used to justify a €160 M capacity investment.
Their working, verbatim
Population is 213m. Average household size is 3, so there are about 71m households.
Penetration of this appliance is 33%.
Appliances are replaced every 5 years.
So annual replacement demand = 213m × 33% ÷ 5 = 14.1m units per year.
At €1711 per unit, that is a market of roughly €24,053 M a year.
The partner has asked you to check it before it goes in the deck.
Supporting data
derived hints
- corrected units m
- 4.7
- overstatement multiple
- 3
stated working
- households m
- 71
- population m
- 213
- household size
- 3
- price per unit
- 1711
- stated units m
- 14.1
- penetration pct
- 33
- replacement years
- 5
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: How many cups of chai are sold in Mumbai on a weekday?Next 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