Is the reachable market large enough to launch?
Use a measured overlap for demand, then check crews and kit supply.
The question
Alder Heat is a fictional installer considering a city in the EU. The partner’s eligibility criteria and uptake estimates are authored exercise data. The goal is positive launch-period contribution after fixed cost.
| Value | |
|---|---|
| Households | 12000 |
| Detached homes | 4800 |
| Income eligible | 3000 |
| Both conditions | 1800 |
| Expected uptake from the overlap | 20% |
| Crew capacity, installations | 240 |
| Supplier kits | No separate limit |
| Contribution, EUR per installation | 2500 |
| Launch fixed cost, EUR | 420000 |
The measured overlap is given. Contribution per installation is after variable costs.
“Can the launch make a positive contribution? Recheck it after the supplier allocates only 150 kits.”
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A strong answer, step by step
Open each step in turn. This is one strong answer, not the only one.
Step 1: What is the right group for the demand estimate?
What would you do here? Open the move you’d make.
Use all 4,800 detached homes.
Tempting, but it misses something. Some detached homes do not meet the partner’s income condition.
Use 1,800 households in both groups.
The strong move. The packet reports the exact group that can take the offer.
Multiply the two eligibility shares across 12,000 homes.
Tempting, but it misses something. That assumes independence and ignores the measured overlap.
See how a strong candidate says it
“Start with the 1,800 households that meet both conditions. Multiply that group by expected uptake. Do not infer the overlap from the separate marginal counts.”
Why it works: The exhibit measures the intersection directly.
Step 2: How many installs can the launch deliver?
What would you do here? Open the move you’d make.
Use 360 installations in the profit calculation.
Tempting, but it misses something. That exceeds the 240 installations the crews can deliver.
Use 240 installations and subtract the launch fixed cost.
The strong move. It applies the binding crew constraint and compares with the stated objective.
Use 1,800 installations because the households qualify.
Tempting, but it misses something. Eligibility does not equal uptake or delivery.
See how a strong candidate says it
“Expected demand is 1,800 × 20% = 360 installations. Crews can complete 240. At 240, contribution after fixed cost is 240 × EUR2,500 − EUR420,000 = EUR180,000.”
Why it works: The launch earns contribution on completed installations.
Step 3: What does the first estimate support?
What would you do here? Open the move you’d make.
Launch up to crew capacity once supply and demand are confirmed.
The strong move. It states a supported action and the conditions on that action.
Commit to 360 installs and add crews later.
Tempting, but it misses something. The packet gives no additional crew capacity or price for it.
Defer only because 240 is less than 360.
Tempting, but it misses something. Capacity below demand can still produce a positive contribution.
See how a strong candidate says it
“I would launch up to 240 installations if the demand and supply commitments hold. Verify uptake and secure kits before incurring the full fixed cost.”
Why it works: A staged commitment is reasonable if the assumptions need more evidence.
Step 4: Only 150 kits are available. What changes?
What would you do here? Open the move you’d make.
Keep the launch because the demand estimate remains 360.
Tempting, but it misses something. Demand is not delivery when supply is limited.
Launch at 168 if additional kits become available.
Tempting, but it misses something. At 168, the contribution just covers fixed cost. The objective requires a positive result.
Recompute with 150 kits and state the threshold for a positive launch.
The strong move. This applies the new limit and gives a concrete negotiation target.
See how a strong candidate says it
“Delivery falls to 150. Contribution after fixed cost is 150 × EUR2,500 − EUR420,000 = −EUR45,000. Defer the full launch or renegotiate supply or fixed cost. Break-even is 168 installs, so 169 are needed for a positive result.”
Why it works: Crew and demand figures still hold, but kits now bind.
The answer, in short
- Decision
- Defer the full launch at 150 kits and the original fixed cost.
- Because
- The revised result is a EUR45,000 loss despite enough demand and crew time.
- What would change it
- At 150 kits, a fixed cost of EUR350,000 would produce EUR25,000. With the original fixed cost, at least 169 completed installations are needed.
Common traps
- Assuming independent eligibility when the overlap is given.
- Treating forecast demand as delivered installs.
- Confusing break-even with a positive result.
Check your answer
- Did you use the measured overlap?
- Did you limit installs by all relevant capacity?
- Did you subtract the launch fixed cost?
- Did you separate break-even from positive contribution?
Last reviewed Nov 11, 2026