# of gas stations in Chicago

Case interview prep Market sizing
New answer on Feb 24, 2021
4 Answers
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Floyd asked on Feb 23, 2021

Hello everyone! I would like to know if this is a good approach when finding the number of gas stations in Chicago:

I would start by finding the # of cars in Chicago divided the number of cars per gas station.

To find the # of cars in Chicago at a given day I would multiply the number of households x the number of cars per household. To find the number of households I would divide Chicago population by # of people per household. In that order:

Chicago population 3 m aprox.
# people per household 3
# cars per household 1

# cars in chicago = 1M

To find the number of cars per gas station per day I would start finding the capacity per gas station x utilization rate x hours open. In that order:

Capacity = 4 (4 pumps on average)
Utilization rate = 50%
Hours open = 24 h

# Cars per gas station per day = 2 x 24 = 48

# Gas stations in Chicago = 1 M / 48 = 21000 aprox.

I am not sure if this approach is good since my number is way higher than the current one. Do you know where is the mistake?

Thank you very much

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Antonello
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replied on Feb 23, 2021
McKinsey | MBA professor for consulting interviews

Hi Floyd,
the approach is good, but you should review 2 assumptions:

  1. Cars do not go to the gas station every day -> you should estimate the frequency and divide the total number of cars
  2. 1 refuel does not last 1 hour -> if you assume 6 minutes per refuel with an utilization of 50% you have 10 cars served per pump per hour. I suggest using a smaller utilization for night hours


I would like to suggest similar cases in the platform to practice with:

  • https://www.preplounge.com/en/consulting-forum/how-much-would-you-charge-to-clean-all-the-windows-in-seattle-4965
  • https://www.preplounge.com/en/consulting-forum/market-sizing-milk-consumption-5087
  • https://www.preplounge.com/en/consulting-forum/how-would-you-calculate-the-value-of-a-cow-4982
  • https://www.preplounge.com/en/consulting-forum/estimate-number-of-traffic-lights-in-a-london-5692

I have developed specific frameworks to crack all the market sizing. Feel free to text me for additional details.

Hope it helps,
Antonello

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Floyd on Feb 23, 2021

Thank you very much Antonello :)

Ian
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replied on Feb 23, 2021
MBB | 100% personal interview success rate (8/8) and 95% candidate success rate | Personalized interview prep

Hi there,

This is overall good, but the mistake is in your cars per gas station per day.

1) You need to estimate how many of those 1 M cars are refueling every day. I would estimate people refill their cars every 1-2 weeks...so around 5-10% of all cars refuel on a single day

2) There are not 48 cars per gas station per day. You've assumed a utilization rate of 50% which is super high (50% of all pumps used at all times...think about midday as well as 8pm-6am).

You've also assumed that each car takes a full hour to refill (i.e. your 2x24 multiplication)...they should only take about 10 minutes...so you need 2x24x6 (6 "shifts" per hour)

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Floyd on Feb 28, 2021

To calculate the frequency rate did you solve 1/15 days (15 days in 2 weeks) = 0.06 or 6%. Right?

Clara
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replied on Feb 24, 2021
McKinsey | Awarded professor at Master in Management @ IE | MBA at MIT |+180 students coached | Integrated FIT Guide aut

Hello!

I like very much that you posted the approach, is the way to go.

Looks great until you don´t make the consideration that cars don´t refuel every day.

Another way would be to calculate which is the area covered by one gas station -making the difference between roads and urban areas- and multiply per the total area in each of those 2 categories.

Hope it helps!

Cheers,

Clara

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Gaurav
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replied on Feb 23, 2021
Ex-Mckinsey|Certified Career Coach |Placed 500+ candidates at MBB & other consultancies

Hi there,

indeed a good approach, but take into consideration that you don't pump your car every day.

Cheers,

GB

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Antonello gave the best answer

Antonello

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