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The Top-Down Approach: The second and arguably most crucial stage is determining which path to take. There are two possible approaches to resolving the issue. The top-down strategy is the first. When you need to start with the population of a city, state, or country, the top-down technique is sound. After you've chosen a figure that's close enough to the actual amount (Hint: Before you go to the interview, make sure you know the demographic details of your city, state, and country), you'll need to divide the population into age categories, gender groups, and income groups. For example, if you're asked to determine the number of Dettol Shaving Foam users in Delhi, you'll have to adopt a top-down technique. To begin, you must first determine the population of Delhi, after which you must determine the number of males. The gender parameter is the first bifurcation. It does not, however, end there. You'll now divide males into age groups. Males under the age of 18 will not be shaving. You can get rid of at least a quarter of those men. The males who remain will be separated into two groups. One is those who shave, and the other is those who trim their beards. At least another 20% of the males who might be cutting can be ruled out. The next group of males will be those that shave regularly. However, shaving foam would not be used by all of them. Some of them may be using shaving cream. As a result, you'll need to break things down even more. And so forth.
If you recall, we began our solution to the above problem by sampling the whole population of Delhi before narrowing it down to the shaving foam target audience. This strategy follows a top-down approach.
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The Bottom-Up Approach: The Bottom-Up technique is the next method. When you need to start a solution by assuming what one person in your target group would do, this strategy comes in handy. For instance, you might want to estimate how much one person spends in a Burger King's outlet in a day. You can extrapolate that average amount to the total population to see how much a Burger King's outlet earns in a day.
It is preferable to pick which approach you will use to answer the question as soon as you receive it. Understand that guesstimates are challenging not because they require many assumptions but because they require eliminating all irrelevant data.
You now know how you'll proceed and have identified your Target Group. All you have to do now is solve all of the puzzle parts, combine them, and deliver the solution. Let's try to respond to the question I posed earlier.
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The Question: How much money does a McDonald's store in Delhi make every day?
Take some time to figure out which strategy you'll use to answer this specific question. In guesstimates, there is no right or incorrect answer. What matters, as previously stated, is how you approach the situation. You're on the right track if you can give reasonable justifications for your reasoning and eliminate all the irrelevant data.
Returning to the original question. First, I'll address some of my concerns regarding this topic. Is he referring to a specific outlet because a CP outlet might make more than an East Delhi shop? Is he referring to revenue or profit when he says "makes per day"? Is it necessary for me to take a specific day because a store may earn more on weekends than weekdays?
Following the clarifications, I must state the approach that I will use to answer the question. Bottom-Up is the method I'm going to use. And I will start with my assumptions.
Assumptions: In a McDonald's outlet, the average person spends INR 200. The weekend aspect has no bearing on the sale. In Delhi, all stores enjoy a comparable amount of foot traffic. There are three cash counters in the store. The store is open from 10 a.m. until 10 p.m.
So, I've taken my initial assumptions and relayed them to the interviewer.
Solution: In a typical McDonald's outlet, an average customer spends Rs. 200. I'm going to split the day into two parts. The first bucket is a low-flow bucket, indicating that consumer traffic is light. The second bucket is a high-flow bucket, which means that the volume of customers is exceptionally high.
For odd hours, the low flow bucket can be picked. Lunch and dinner are the buckets with the most traffic. Let's keep the ratio of low flow to high flow be 1:2, i.e., for 4 hours (two 2hours shifts) and 8 hours (two 4 hours shifts). I need to make some further assumptions.
Further Assumptions: The average time to place an order is 3 minutes, and this duration is consistent throughout both high and low flow periods. When there is a large flow, all three counters are used, and the time loss for the following group of consumers is zero because there is a long line of customers. During a low-flow period, it takes 7 minutes for the next set of customers to enter the store.
Calculations
High Flow: Because all three counters are in use at the same time, and placing a single order takes three minutes. So, three orders are placed in three minutes (summation of the orders from the three counters). And 60 orders are placed in 60 minutes (no loss of time as there is a long queue during the high flow period). One order cost an average of Rs. 200. So, in 60 minutes, 60*200=12,000 rupees will be earned. Because one high flow period lasts for four hours, the total amount of money earned during that time is 4*12000 = INR 48,000. Another 48,000 will be awarded if the second high flow period performs similarly. 2*48,000 = INR 96,000 is the total amount earned during the high flow period.
Because we assumed in the aforementioned scenario that the time difference between the outgoing and arriving customer is zero, this will be the maximum income we will make during the high flow period.
Low Flow: Still presuming all three counters are in use at the same time. However, because the customer flow is minimal, the next group of customers will arrive in 7 minutes. Because we have assumed a huge time difference between the two sets of customers, it is still a reasonable assumption to make. We got three orders in 3+7=10 minutes during the low-flow time.
During the low flow phase, we receive 3*6=18 orders in 60 minutes. One order cost an average of Rs. 200. So, in 60 minutes, 18*200=3,600 rupees will be earned. One low flow period lasts for two hours, resulting in a total profit of 2*3600 = INR 7,200.
Another 7,200 will be awarded if the second low flow phase performs similarly. During the low flow phase, the total money earned is 2*7,200 = INR 14,400. The total amount of money earned during the course of a day is 96000 + 14400 = INR 110,400.
Conclusion: A bottom-up strategy is used to solve a guessing question in this way. I've tried to keep things as straightforward and exhaustive as possible. I hope that readers find it useful
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