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# Exercise 25 – Estimate the number of bicycles required to start a bike sharing operation in a big city.

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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.