Consulting Series Part 1- The Diaper Case | IIM Bangalore

Consulting companies coming for recruitment to B schools ask the candidates to solve cases, much like the one described below. Successful candidates display a methodical thought process, familiarity with numerical analysis, and some degree of confidence while solving cases. However, even the best of us have certain “OOPS” moments, when a wrong initial thought can get everything FUBAR’d. Reproduced below is one such case interview.. The candidate in question is well known to me, and is an extremely intelligent guy. But…..

Interviewer (Henceforth referred to as Y): So, ‘X’, (the interviewee, henceforth referred to as, well, X) good morning…

X: Good morning, Y

Y: Let me present the case details to you. Our client is a diaper manufacturer catering only to the South Indian market. He wants to estimate demand for the coming year, in order to decide whether to set up a new plant or not. You are assigned the task of determining the annual demand for diapers in South India. Start when you are ready.

X: Restating the case: So, I need to determine the annual demand for diapers in South India. Am I right?

Y: Yes you are.

X: Does that include used diapers or fresh ones?

Y:Does it make any difference? Both are essentially diapers, right?

X: If you say so. But back when I was a kid, the used ones could hardly be counted as diapers.

Y:Err…. well. Just estimate the demand, taking all diapers into consideration.

X:Fine. Can I take 2 min to think ?

Y: Sure. Go ahead

Fast Forward 2 min….

X: So Y, I shall assume that the population of India is 1.2 billion. Am I correct in assuming that?

Y:Yes, well ,that is fairly well known.Tell you what, make all your assumptions at one go and then tell me.

X: Sure?

Y:Sure.

X: Ok. So here goes. Out of those 1.2 billion roughly 0.7 billion live in South India. 2/3 are less than 35 years old. Taking this ratio and using it to calculate the proportional figure of kids who are less than 5 years old, I get the figure of 20%. Now I shall proceed by assuming that 90% of the kids of age less than or equal to 5 years would use diapers and the rest would use “langotis”; and assigning that value as “p”. That being said, the GDP growth of India is currently 6.1 % and retail contributes 8-10 % of this growth. Taking that into consideration, we get a partial demand for diapers as “q”, if we assume that diaper sales account for 35% of the retail sales in India. Again, South India experiences cold, rainy monsoons during June-September, when couples generally tend to stay indoors. This leads to an increased frenzy in procreation, translating into an acceleration in demand during the April-June season. If we assume the population of married couples of child bearing age to be 1/3 of the population under 35 years of age and further assume that the sex ratio in India is 933:1000, we get a figure of “r” as the number of children who would presumably be born ( assuming that each couple bears only one child). Now 90% of “r” would be “0.9r”. Again, if we factor in the percentage of population who drink, party and generally commit stupid acts of amorous nature under intoxication, (leading to further bursts of child births) and subtract from it that percentage of people who take suitable precaution, we get a partial demand figure of “s”. Now, just add p+q+0.9r+s to get the annual demand.

Y: (Completely confused)…. Err…. very interesting. Hmm, but, ….. hmm. Ok, so you have got these figures. Very interesting. Err…. may I see the calculations?

X: Sure.

Fast forward 1 min of furious calculation on both parts…

Y: So, X, very impressive. According to these figures, there seems to be an annual demand of 36,000 crores of diapers in South India.

X: (Beaming) ..My recommendation is that the client should go in for aggressive expansion.

Y: Chuck the client. I’m resigning tomorrow and going into the diaper business myself. Oh and by the way, you are hired.

X: (Smiling broadly).. Thank you Y.

Disclaimer: All the people involved in this case as well as the incident described are real. The “Diaper Case” may have several solutions depending on the assumptions made, but the solution described above has been proven to be optimal. I am intentionally not disclosing the names of the company or the candidate. But intelligent guesses are welcome, and upon friendly persuasion accompanied by material benefits, I am ready to divulge further details.

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