I agree with you, but an interview is not quite "the real world", which is something that all the parties involved realize.
If this is not what the interviewer wanted, they'd be better served by asking a slightly more fantastical question that would still show problem-solving skills. Also, the interviewer should qualify the question by saying that "this isn't a real world situation, I just want an algorithm". I don't know how someone would react to that situation.