Operating Hours: Estimate the average number of hours the hospital's emergency department is open each day, considering that capacity may vary throughout the day. For instance, during daytime, there might be more staff, and thus, higher capacity, while during the night, capacity could be lower.

Capacity per Hour: Consider different capacities for various time blocks during the day. This could be, for example, 10 patients per hour during the daytime when the department is fully staffed, and 4 patients per hour during the night when staff levels are reduced.

Utilization: Estimate how much of the department's capacity is typically utilized. For instance, during peak hours, the department might be operating at nearly full capacity, but during off-peak hours, utilization could be lower.

Days Open: Assume the department is open every day, which is common in most hospitals, resulting in 365 days a year.

Estimate: Calculate the estimated annual throughput by multiplying the number of operating hours per day by the capacity per hour for the respective time block, adjusting for utilization, and then multiply by the number of days open per year.

For example, you might assume:

• Daytime (8 AM to 8 PM): 10 patients per hour, 80% utilization
• Nighttime (8 PM to 8 AM): 4 patients per hour, 60% utilization

Annual throughput = (12 hours x 10 patients x 80%) + (12 hours x 4 patients x 60%) x 365 days = Estimated annual patient visits to the emergency department.

Hi there,

Population is not the right approach. You have no idea what the right breakdown is. You are guessing. Market sizing is about estimating not guessing.

Rather, you should look at capacity/throughput of the hospital. You should take an approach similar to this one:

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/intermediate/market-sizing-with-solution-coffee-shop-revenue-318

Here are 2 other cases where I physically walk you through the answer in video format:

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/beginner/market-sizing-with-solution-number-of-taxis-317

https://www.preplounge.com/en/management-consulting-cases/candidate-led-usual-style/advanced/market-sizing-with-solution-number-of-internet-users-319

How to approach market sizing

It's very simple: Do the approach the is the easiest for you given the question.

Are they asking you to estimate something where you don't even know where to begin from the top (maybe you have 0 clue as to the market size of the industry, the GDP of that country, etc. etc.)? Then do bottom-up!

Alternatively, does it seem impossible to do a realistic from-the-ground-up estimation of something (perhaps it requires just far too many steps and assumptions)? Then do top-down!

Fundamentally, you need to take the approach that just makes the most sense in that circumstance. Quickly think about the key assumptions / numbers required and whether you 1) Know them or 2) Can reasonably estimate them. If you can, go ahead!

An Example

He's a Q&A for a great market sizing question here asking to estimate # of electric charging stations in a city in 10 years:

https://www.preplounge.com/en/consulting-forum/how-would-you-solve-this-market-sizing-question-from-roland-berger-7631

This one could be answered top-down (as I did) by estimating population of the city, # of drivers/ cars, etc. etc.

OR, it could be answered bottom-up by estimating # of stations you see per block (or # of gas/petrol tanks), % increase this might be over time (or # of EV stations that would be needed per gas tank given EV stations take 10 times as long), and # of blocks you'd estimate the city to have.

Hi there!

Lots of useful responses below already. 

Just wanted to add that even after you agree on the approach and final number with the interviewer, you are still expected to ‘comment’ / ‘interpret’ the number like in a calculation exercise during a case. 

Specifically for market sizing questions, this commentary can be about some of the assumptions that you took and which are sensitive (i.e., if proven wrong the final number will be very different) OR some of the next steps that you would take following the market sizing exercise. 

Best,
Cristian

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