Case Interview Preparation & Management Consulting | Strategy | Critical Thinking 844: Estimation Sensitivities During Calculations (Case Interview & Management Consulting classics)
Mar 23, 2026
A walkthrough of two estimation methods: demand-side assumptions and capacity/flow-rate math for enclosed spaces like restaurants. A demonstration comparing bagel sales estimates from each approach. A focus on sensitivity analysis and how tiny demand shifts can wildly change results in small spaces.
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Use Flow Rates For Small Enclosed Spaces
- Do estimate small enclosed spaces using supply-side flow rates rather than demand-side population models.
- Calculate cashiers × hours × 1/order-time × %food × %breakfast × %bagels × bagels/order × price to get a realistic revenue range.
Starbucks Bagel Estimate Failed Capacity Sanity Check
- Example: a demand-side estimate for bagels at an average Starbucks produced ~$10,000 which failed a simple capacity sanity check.
- Two cashiers couldn't possibly process ~1,250 bagels/hour, revealing the demand approach was wrong.
Demand Models Are Oversensitive For Small Stores
- Small changes in large-population demand models produce outsized effects when applied to small stores because absolute numbers are large and variances scale the result massively.
- A 1% population increase can change estimated store sales by hundreds of dollars, which overwhelms realistic capacity limits.