GUESSTIMATES SESSION

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What are Guesstimates?
Sample questions:

• Estimate revenue through sale of Coke from a typical store in IIM Lucknow (Star TV)
• Estimate number of flights taking off in a day from the Delhi Airport (Deloitte)
• Estimate number of vehicles in a toll gate of your choice (Amazon)
• Estimate number of excel users in the world. Microsoft wants to de-license some products, so want to
estimate revenue loss (Microsoft)
• Estimate number of baby diapers sold in India (HUL)
• Estimate number of rooms used by tourists in India in hotels in an year (Car Dekho)
• Estimate number of autos in India (Accenture)

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How to approach Guesstimates?
 Top Down Approach versus Bottom Up Approach

 Supply side view versus Demand side view

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Top Down versus Bottom Up Approach
Start Big Approach:
• Start with the ‘Bigger Picture’ : population of India
• Break it down into segments: rural-urban/income
• Estimate for each segment

Start Small Approach

• Estimate for a smaller sample
• Extrapolate to entire population

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Sample Question: Estimate the number of diyas
sold on Diwali in India

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 Top down approach
Demand for Diyas in Diwali Season Bottom up approach

Demand from Households Demand from Temples

Population (1.2 billion)

Hindus (80% ~ 960m) Others Small temples Major temples

Consider number of Number of

temples in your city big temples in
Rural (70% ~ 700m)1 Urban (30% ~ 300m) (Dehradun) : 1/1000 your city ( is
population 2) ~ 1/1m
5 member 4 member
population
household household
140m households 80m households ~ 1.2 billion /1000 = 1.2 m ~ 1.2 billion / 1m = 1200

20 diyas per 20 diyas per temple2 100 diyas per

house2 temple2
140m*20 = 2.8b
small (50%) mid (40%) large (10%) ~ 1.2m * 20 = 24 m ~ 1200*100= 0.12 m

40m*10 = 400m 32m*20 = 640m 8*50 = 400m

Total = 24m
For 1 main day. For 5 day period (factor
Total = 4.24 billion replacement, reduced usage on other days to
calculate 5 day demand)

1 Take reasonable assumptions in calculations (c) Team Disha Total ~ 4.264 billion
2 Explain all assumptions
How to approach Guesstimates?
 Top Down Approach versus Bottom Up Approach

 Supply side view versus Demand side view

(c) Team Disha

Sample Question: Estimate Daily revenue of a
restaurant

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Supply side view
To account of difference in occupancy
Estimating daily revenue of a restaurant

Q1. Size of Restaurant = 40 tables * 5 Chairs

Q2. Quality of Restaurant = 3 Star Multi Cuisine
Q3. Operating Hours = 8 AM to Midnight
Q4. City of operation = Mumbai

Breakfast Lunch Dinner

Take reasonable
assumption about the
operating hours, say
8AM to 11 AM

Buffet A la carte

Note:
1. Similarly, by using reasonable assumptions, revenue can be computed
Weekday Weekend (Sat-Sun) for all the segments and added to get the total revenue for the day
2. Assumptions like occupancy rate, difference between occupancy rate
across weekday and weekends or breakfast, lunch and dinner can be
based on general observation
Expected Occupancy = 50% 3. The guestimate can be further fine-tuned by accounting for drinks,
Total customers served in a churn = 50% * 200 = 100 other services which can be individually computed and added to the
Total number of churns (assuming 40 mins per churn) = 3 hrs * 60 mins / 40 mins = 4.5x overall value
Per head cost for breakfast = ₹ 400
Total Revenue from this segment = ₹400 * 4.5x * 100 = ₹ 1,80,000

(c) Team Disha

Important Facts and Figures
 Population : India, Lucknow, hometown + other cities where you have stayed
 Literacy Rate
 Rural – Urban Ratio: ~70% - 30%
 Female : Male ratio of India, your city
 Age wise break-up of the population
 Income wise break-up of the population
 Population Growth Rates
 Sector - wise breakup of GDP
 Sector –wise occupation

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