Question

Estimate the number of bicycles required to start a bike sharing operation in a big city.

Answer 1

Let’s assume the population of a large city is 10million. Given ride sharing is suitable for more dense areas, I want to first offer it to the people in busy neighbourhoods (i.e. downtown). Let’s assume 30% of the population lives in downtown. The estimated population of people in downtown would be 3 million.

Now, lets assume the 3 million people have an even age distribution from 0 to 80, meaning there are 3million / 80 = 37.5K people per age year.

There are two groups of people who will use a bike:
– those who use bicycles for commute to work (school) + other things
– those who use bicycles for everything other than commute to work

First, let’s look at population of people who are willing to use bike to commute to work + other things.

Say the target market is in age range of 15 to 45 with the following probability of interested in using bicycles as one method of transportation to work(school) + other things:

age group 15 to 20 – 5% interested in using a bicycle as method of transportation for work(school) + others —> estimated population 5×37.5Kx5%= around 10K
age group 20 to 30 – 10% interested in using a bicycle as method of transportation for work (school) + others—> estimated population 10×37.5Kx10%= 37.5K rounded
age group 30 to 45 – 5% interested in using a bicycle as method of transportation–> estimated population 15×37.5Kx5%= around 30K

Total target bikers population in downtown = 10K + 37.5K + 30K = around 80K

Let’s assume 30% of these people are willing to use bike sharing and 70% prefer to continue using their own bikes. Now, the total number of people willing to use bike sharing for commute to work (Schoo) + other things is 30% x 80K = 24K

Now, if these people use the bike 2 times per week day (it might be slightly higher since they use the bike for shopping too but then they also go on vacation so let’s say 2 per day), they will have 2 x 24K = 48K rides per day. Assume each ride takes 15 minutes, this group does 48K x 0.25 hour = 12K hours of bike ride per day

Now to calculate total number of people in group 2,

First, let’s get an estimate on the total number of people willing to use bicicyle for going shopping / travelling to friend’s place, etc. Let’s estimate the population of this group in our target age range (15 to 45):

age group 15 to 20 – 20% interested in using a bicycle as method of transportation –> estimated population 5×37.5Kx20%= 37.5K
age group 20 to 30 – 30% interested in using a bicycle as method of transportation–> estimated population 10×37.5Kx30%= 112.5K
age group 30 to 45 – 20% interested in using a bicycle as method of transportation–> estimated population 15×37.5Kx20%= 112.5K

Total = 37.5K +112.5K + 112.5K = 267.5K

Let’s also assume 30% of these people are willing to use bike sharing and 70% prefer to continue using their own bikes. Now, the total number of people willing to use bike sharing in group 2 is 30% x 267.5K = 90K

About 24K of people in this group belongs to group 1. In other words, people who use their bike for transportation and not commute to work is 90K – 24K = 66K.

Say say these people use the bike about 1 time per day to do a transportation for 15 min. That would mean they do about 66K x 1 x 0.25 hour = 16.5K hours of transportation per day with bike

So, total estimated bike ride time per day is 12K + 16.5K = 28.5K hour per day.

Assuming that during first 2 months of the bike share launch, company can obtain 10% of target market, it will need to be able to support 10% of 28.5K = around 3K hour of bike ride per day.

If we want each bike to have a utilization of 50% to make sure that there are always some bikes available in the bike share stations and if each bike is used from 8am to 12am evenly during the day (this is a big assumption given many people go to work or school to be in their office or class at 9am), we can say that at 50% utilization for 16 hours a day (time from 8am to 12am), each bike can ride for 50% x 16 hours = 8 hours per day.

Now, divide the 3K hours by 8hours and you get the minimum number of bikes needed to start the company. 3K divided by 8 equals 375.

Another method to calculate this number would be to estimate number of bikes needed to support the bike share members at the busiest time of the day (it’s most likely from 8 to 9). Let’s say that at this time, 50% of the 90K bike share commuters go to work (school). This means the bike share company should be able to support 90K x 50% = 45K bike rides during 8am to 9am time interval. Assuming each ride takes 15 minutes, 45K bike rides translates to 45K x 0.25 = 11.2K hour of bike ride. Let’s say the company needs to be able to have infrastructure to support for 10% of the these rides during first two months of operation, meaning 11.2Kx10% =1.1K hour of bike ride. Assuming bikes are used at 100% utilization, the company needs to have 1.1K bikes at the start of the bike share program.

Answer 2

I would calculate the number of riders requested each day and than divide by the number of rides a bike makes in a day.

Assuming the city is Bay area with lets say 100K population. I would divide the request of consumers based on age.

teenagers – Might use bike for fun activity or travelling locally around town. 10% of population – 10k- assuming 10% of teenagers use it for 2 rides a week. – 2k rides

20-40 – working category – 50% of population – 40% use this service for 3 times a week = 100000x 50%x40%x 3 = 60K

40-60 years – 30 % of popoluation use service – 30000 , 20% of this pop use this servie – 6000. Use it 2 a week = 12000 rides weekly

60+ = 1000 rides a week

total weekly rides req = 2k+60k+12k+1k = 75k.

Daily ride req = 10k

Average rides per bike = 3.

total bikes = 3.3K

Answer 3

Bijan, how would you clarify a question like this?

Comments

I would either ask clarification questions or share my assumptions regarding the size of the city. To tackle this problem, you will need to make a bunch of assumptions about the frequency of usage, initial market to focus on, size of the niche market, etc. You would want to communicate your assumptions as clearly as possible and give the recruiter a chance to challenge them:)
Feel free to post your answer here and get some feedback.

Answer 4

Clarifying Questions: 

1. Is it an aggregator model using existing bike providers or starting a new one?

2. Are we supposed to optimize the bike sharing for a specific goal? e.g. maximize use of bicycle, acceptable wait time etc?

 

Top Equation:

# Bicycles required = # people requiring bicycle in peak time / # people served per bicycle at any time with acceptable wait time

 

 

Now lets solve this one by one:

 

1. To solve the first part of the puzzle, we need to make certain assumptions:

 

Population of a big city 5M

 

Target users who would use the bicycle sharing

1. Visitors/ travelers (1% * 30% )

2. Daily Commuters taking public transport (10% * 30%)

3. Shoppers (2% * 20%)

4. Students - school/ college (20%*30%)

 

#2 and #3 would show opposite characteristics over weekdays and weekends. e.g. commuters would be 10% over weekdays but shoppers would be 10% over weekends

 

 

# people requiring bicycle per min in peak time = # population require bicycle / peak duration in min

5M*0.01*.3 + 5M*.1*.3 + 5*.02*.2 + 5*.2*.3 = .5M

 

 

2. To solve the second part of the puzzle, we need to look at the demand patterns:

 

Lets say that demand is evenly sparsed in the peak time and the peak duration is between 7-9am in the morning where most commuters and students travel

 

So peak duration is 2 hrs = 120 mins

Average distance a person can/ will travel on a bicycle = 1 Mi

Average time a person can/ will use a bicycle in peak time = 10 min including traffic time

People a bike can serve per min = 1/10

Acceptable wait time = 2 min (assumption as people may prefer to walk instead of using bike to be in office/ school in time)

 

People one bike can serve in 120 min = 12

# people served per bicycle at any time with acceptable wait time = 1/5

 

Now lets feed this into our top equation to get the estimate of bikes required:

# Bicycles required = .5M/.2 = 2.5M

 

Since we have our estimate at hand, lets double check whether this number seems reasonable.

Bike Required is coming out to be half the size of the population, so we need to go back and correct our assumptions.

 

Our estimation of the second equation seems correct but the population set requiring bike seems way off. 

Couple of additional factors that come to my mind:

1. We have considered the full city population while we could narrow it down to a specific area that we like to target but lets not talk about that for a min

2. Our population number is still the people who prefer to use bicycle for their mode of transportation but we haven’t considered how many of those would be interested in bike sharing service. Lets say this number is 10%

3. Even for the population that is interested in using bike sharing population, our penetration may be slow and lets say we can only take 10% of the market of interested people as there may be other players

 

So reworking that equation with #2 and #3

 

# people requiring bicycle per min in peak time = .5M * .1 * .1 = 5K

 

So revised estimate for # Bicycles required = 5K/.2 = 25K

 

This number would be reasonable to serve a large city and to penetrate deep into the market. However, company might want to target a smaller area to test their operations out and can actually reduce the bike requirement to an acceptable number.

 

Answer 5

- Assume that big city of population, and the population equals 3 millions

- Assume target customers are between (20:45) who are healthy enough to use the bikes and specifically to commute from home to work

- Assume the duration usually starts when the bike is taken and returning back to the stops and the stops are within the city

- Bikes are available 24 hours but there's a utilization rate of 50%

Equations:

- Total market size= Total population* [%] of age group
                              = 3(m)*0.2
                              = 600k

- First 3 months focusing on 10% market share= 60k

- Number of rides from and to work= 60k*2=120k

- Duration of a ride between a stop to another per day=120k*0.5h=60k h

- Bike availability per day= 24*0.5=12 h

- Number of bikes should be available per day= 60k/12=5k bikes