# of gas stations in Chicago

Case interview prep Market sizing
New answer on Feb 24, 2021
4 Answers
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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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Best answer

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:

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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Thank you very much Antonello :)

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)

Was this answer helpful? 13
To calculate the frequency rate did you solve 1/15 days (15 days in 2 weeks) = 0.06 or 6%. Right?

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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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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