Guess-estimates: How to crack them!

Everywhere, you see job positions titled “Analyst” increasing in number. But, what are the pre-requisites is still unknown!
People approach me to know if Python is better or should they start analysis with R.
Well, this can be answered later, but there are certain ways in which an employer gets to access the logical and business skills an applicant possesses.

  • Guess estimates
  • Case studies

In this post, I am going to talk about Guesstimates, general approach to be followed, and cover an example to help you get started.

Guesstimate is defined as an estimate made without using accurate or complete information, or one arrived at by guess-work or conjecture.
They are puzzle-like questions, where you are expected to estimate a figure by putting a framework to a question, creating segments, making assumptions and adding up the numbers to arrive at a “number”.

NOTE: Any hiring manager would prefer a wrong answer with a better approach than an accurate answer with a bad approach.

Eg. Estimate the number of office chairs sold in India.

Let’s define a proper framework for solving any sort of Guess-estimate problem..

1. Find the right proxy: The proxy is a parameter which behaves in a similar fashion as the dependent parameter. In the chair estimation problem, the population of India is a good proxy for the number of office chairs sold. If the population increases, the number of chairs sold shall also increase.
Other proxies that are used generally are – growth in population, growth in demand of a product or world population.

2. Segment till differentiated clusters: Estimating parameters on a segmented level is far easy than making guesses on the overall population. In the chair estimation problem, the population can be divided into Rural and Urban areas, and those between ages 21-60 can be safely assumed to be in offices.
This is how segmentation helps in making accurate assumptions.

3. Do smart calculations and round off: Speed is really important and one needs to maintain a balance between time consumption.
If you want to divide 8999/3, easier to calculate 9000/3 = 3000. Write it as 3000 (-), so that it can be adjusted somewhere else.

4. Validate number magnitude: Always validate the intermediate numbers using your experience and sense checks.

Some tips to get you started:

  • Approach matters, not the numbers. (Do, cross-validate though!)
  • Go top down to solve. Draw proper diagrams and segmentation to show approach.
  • Keep a few common proxies on your tips. (Population of your country, world)
  • Analyse all possible uses of the subject. (B2B & B2C)
  • Call out assumptions and blind spots.
  • Look at key parameters for airline management. (QUITE COMMON) – Number of flights that normally stay in major airports, time lag between flights.
  • Don’t round off in the same direction. Putting sign (-) in front helps.

Below written are ballpark figures. Try to remember them. (Indian Figures)

Screen Shot 2016-08-04 at 6.02.21 PM Screen Shot 2016-08-04 at 6.02.43 PM.pngScreen Shot 2016-08-04 at 6.02.31 PM

Coming back to the chair problem,

Current population of India – 1.252 billion
It’s important to estimate the working population in India.

Assuming an even distribution of people in a particular age group and considering life expectancy to be 80 years,

People in age group 21-60 group = 0.5*1.252 billion = 0.626 billion

Roughly, 30% people live in Urban areas and 70% in Rural areas.

– Urban Areas: Assuming that out of total workforce, only 30% has to do with a chair in office = 30% of 30% of 0.626 billion = 56.5 million

– Rural Areas: Since most of rural area is related to farming/labor intensive activities, I would assume 10% of people use office chairs in administrative/govt. offices
= 10% of 70% of 0.626 billion = 43.82 million

Total = 56.5 + 43.82 = 100.32 million

Also, there are some places like conference rooms where chairs are empty, but 10% rural will compensate. (because, it is steep actually!)

Questions asked by some companies:

  • Estimate the golf balls that would fit in an Airplane (Boeing 747). – ZS
  • Estimate the number of dams in India. – ZS
  • Estimate the number of pizzas sold in IITR campus in a month. – ZS
  • Estimate the number of streetlights in Roorkee. – ZS
  • Estimate the number of napkins used in Taj Hotel. – Indus Insights

Most popular questions:

  • Estimate the revenue for Monopoly board game sold in India per year.
  • Estimate the total number of petrol pumps in India.
  • Estimate the number of tennis balls bought in India per month.
  • Estimate the usage of Surf Excel detergent in a day in India.
  • Estimate the number of smart phones sold in India per year.

Book for reference: “Guesstimation: Solving the World’s Problems on the Back of a Cocktail Napkin

Useful Links: 
https://www.quora.com/What-is-the-best-approach-to-solve-guesstimates
– https://www.quora.com/topic/Guesstimation-Interview-Questions
– https://www.quora.com/topic/Guesstimate-1

Guess estimates are one of the most common case studies asked in analytics interview. With right tools and techniques, this case study becomes a cake walk. What is important is to do a lot of practice so that you are quick on your feet in any interview, and are confident of your approach.

Do comment the estimates you find out for the questions mentioned above. And, suggestions are always welcome. 🙂

 

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2 thoughts on “Guess-estimates: How to crack them!

  1. # No. of Golf Balls

    Boeing 747 : Length =70 m , width of passenger area (not the wing span width) =10 m
    Golf ball : diameter =4.25 cm
    Consider Boeing 747 as a cylinder : Volume of aircraft =3.14*5*5*60 =V1( Excluding 10 m length for cockpit area and rear space)
    Volume of Golf ball : 4/3 *3.14*2.125*2.125*2.125 =V2
    No. of Golf balls = V1/V2 =12 crore balls approx
    Also , Cargo volume= 15 % of total volume of aircraft .Hence ,Total no. of Golf balls = 1.15*12 cr =13.8 cr

    Like

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