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How Many Gallons of White House Paint Are Sold in the U.S. Every Year?

Essay by   •  January 21, 2019  •  Case Study  •  4,141 Words (17 Pages)  •  864 Views

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GUESSTIMATES

1. How many gallons of white house paint are sold in the U.S. every year?

THE “START BIG” APPROACH: If you’re not sure where to begin, start with the basic assumption that there are 270 million people in the U.S. (or 25 million businesses, depending on the question). If there are 270 million people in the United States, perhaps half of them live in houses (or 135 million people). The average family size is about three people, so there would be 45 million houses in the United States. Let’s add another 10 percent to that for second houses and houses used for other purposes besides residential. So there are about 50 million houses. If houses are painted every 10 years, on average (notice how we deftly make that number easy to work with), then there are 5 million houses painted every year. Assuming that one gallon of paint covers 100 square feet of wall, and that the average house has 2,000 square feet of wall to cover, then each house needs 20 gallons of paint. So 100 million gallons of paint are sold per year (5 million houses x 20 gallons). (Note: If you want to be fancy, you can ask your interviewer whether you should include inner walls as well.) If 80 percent of all houses are white, then 80 million gallons of white house paint are sold each year. (Don’t forget that last step!)

THE “START SMALL” APPROACH: Take a town of 27,000 (about 1/10,000 of the population). If you use the same assumption that half the town lives in houses in groups of three, then there are 4,500 houses, plus another 10 percent, which makes 5,000 houses. Painted every 10 years, 500 houses are being painted in any given year. If each house has 2,000 square feet of wall, and each gallon of paint covers 100 square feet, then each house needs 20 gallons – so 10,000 gallons of house paint are sold each year in your typical town. Perhaps 8,000 of those are white. Multiply by 10,000 you have 80 million gallons.

Reference :

http://www.bc.edu/clubs/bcfa/docs/vault/Brainteasers%20and%20Guesstimates.pdf

2. Estimate the market for bicycles India.

        India has a population of 1.2B; India has ~30% population living below the poverty line. It would be fair to assume that a negligible proportion of poor population owns bicycles.

        Of the remaining 0.84M, approximately 50% fall in the age group of 8-40, the core bicycle using population. This amounts to ~0.42M people.

        Of these, assuming equal distribution between sexes, there are ~0.21M males and ~0.21M females.

        Here we assume that 75% of men buy at least single cycle in their lifetime and at least 20% women buy single cycle at some point. That makes a total of ~0.2M.

        Let’s divide the population further into high users, middle users and low income groups. Assume high income is 10%, middle income is 60% and low income is 30% Assume that the high income group buys a cycle every 5 year; middle usage buys a cycle every 10 year, low usage buy 1 during their lifetime

        Calculating, cycles bought in a year = 0.2 (0.1/5 + 0.6/10 + 0.3/30) = 0.2 (0.02 + 0.06 + 0.01) = ~0.02M

        Assume the average price per denim to be 1000Rs. Thus, market size = Rs. 20B Answer: Market size of cycles bought in India is ~Rs. 20M

3. Estimate the litres of cola sold in Delhi per day

        Population of Delhi is approximately 15M people.         Assume 30% of population is below poverty line, does not consume cola.         Population above poverty line is approximately 10M people. Cola drinking population

is typically in age group 5-40 years of age. Approximately 60% of Delhi’s population

is in this range, i.e ~6M people.         Dividing this population into High consumers (20%), Moderate consumers (40%) and

Low consumers (40%). Assume high consumers consume approximately 1L per day, moderate consumers consume 0.5L per day and low consumers consume 0.1L per day.

        Thus total daily consumption = 1.2*1 + 2.4*0.5 + 2.4*0.1 = 1.2 + 1.2 + 0.24 = ~2.6M litres per day.

Answer: ~2.6M litres of cola is consumed in a day in Delhi

4. Estimate the number of denims sold in India in a year.

        India has a population of 1.2B; India has ~30% population living below the poverty line. It would be fair to assume that a negligible proportion of poor population wears denims.

        Of the remaining 0.84M, approximately 50% fall in the age group of 6-35, the core denim wearing population. This amounts to ~0.42M people.

        Of these, assuming equal distribution between sexes, there are ~0.21M males and ~0.21M females.

        Here we assume that 80% of men buy atleast single denim in a year and atleast 50% women buy single denim.

        Let’s divide the population further into high income, middle income and low income groups. Assue high income is 10%, middle income is 60% and low income is 30% Assume that the high income group buys 3 denims per person per year; middle income buys 2 denims per person per year, low income buy 1 denim per person per year.

        Calculating, male denims bought = 0.8*0.21*(0.1*3 + 0.6*2 + 0.3*1) = 0.8*0.21*0.18 = 0.03M; calculating female denims bought = 0.5*0.21*(0.1*3 + 0.6*2 + 0.3*1) = 0.02M. Thus, total = 0.05M

        Assume the average price per denim to be 1000Rs. Averaging for branded products in the 1800Rs pus range and non-branded in the ~500Rs. range. Thus, market size = Rs. 5B

Answer: Market size of denims bought in India is ~Rs. 5B

5. Estimate the amount of petrol used in Delhi per day

        Population of Delhi is approximately 15M people.         Assume family size of 5, there are approximately 3M households in Delhi.

Approximately top 40% households would own a car. Thus there are approximately

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