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.
Check the estimate. Your answer should provide:
State any assumptions you make.
100 points, 60% to pass.
Unit consistency; households vs individuals; recompute; sanity-check against a known anchor