shouldice hospital case

Topics: Capacity utilization, Capitalism, Economics of production Pages: 27 (4810 words) Published: November 9, 2013
Two Options... Add a day of operations. Increase beds by 50% Decrease quality? 90 Beds/Day, 5 Days/ Week Current Capacity=90 Beds 90+(90*50%)=90+45=135 Beds

150 Operations/5 days=30 Operations/Day
Max. Capacity=5 rooms*8 Op's=40 Op's/Day
40 Op's*5 Days=200 Op's/Week

45 New Beds, Max of 10 Occupied Add a day of Operations. Both options would increase productivity. Additional floor could not be fully utilized.
Shouldice quality should not be negatively affected. 5 vs. 6 Day Workweek Weekend Hours
Decrease Job Satisfaction? Add a floor of patient rooms. Capacity Utilization
Rate Capacity Used
Best Operating Level Capacity used=
SUM ∑Daily Capacity=
60+90+90+90+60+30+30=450 Best Operating Level=
Capacity maximum*7 days=90*7=630 Current Capacity utilization rate = 450/630=71% Capacity used=
SUM Daily Capacity=
60+90+90+90+90+60+60=540 Best Operating Level=
Capacity Maximum*7 Days=
90*7=630 Capacity Utilization Rate with Saturdays =
540/630=85.7% 71% vs. 85.7% = Addition of Saturdays: 45 Additional Beds Est. Cost $100,000/Bed
$1300 Revenue/Operation
$600 Surgeon's Pay/Operation
75 More Operations/Week The Numbers... Expansion Cost=45*$100,000=$4,500,000 Profit Per Operation=$1300-$600=$700
Profit Per Week=$700*75=$52,500 Payback Period= $4,500,000
$52,000 =85.7 Weeks=1.6 Years CALCULATIONS Until Profit Only 3 days not used to full capacity. No capital required.
No construction
Revenue outweighs extra costs PRO's CON'S Decrease in Employee Satisfaction? Decrease in Quality
of Services? QUESTIONS? The End! Potential Profit in 5 years = $6,678,000Two Options... Add a day of operations. Increase beds by 50% Decrease quality? 90 Beds/Day, 5 Days/ Week Current Capacity=90 Beds 90+(90*50%)=90+45=135 Beds

150 Operations/5 days=30 Operations/Day
Max. Capacity=5 rooms*8 Op's=40 Op's/Day
40 Op's*5 Days=200 Op's/Week

45 New Beds, Max of 10 Occupied Add a day of Operations. Both options would increase productivity. Additional floor could not be fully utilized.
Shouldice quality should not be negatively affected. 5 vs. 6 Day Workweek Weekend Hours
Decrease Job Satisfaction? Add a floor of patient rooms. Capacity Utilization
Rate Capacity Used
Best Operating Level Capacity used=
SUM ∑Daily Capacity=
60+90+90+90+60+30+30=450 Best Operating Level=
Capacity maximum*7 days=90*7=630 Current Capacity utilization rate = 450/630=71% Capacity used=
SUM Daily Capacity=
60+90+90+90+90+60+60=540 Best Operating Level=
Capacity Maximum*7 Days=
90*7=630 Capacity Utilization Rate with Saturdays =
540/630=85.7% 71% vs. 85.7% = Addition of Saturdays: 45 Additional Beds Est. Cost $100,000/Bed
$1300 Revenue/Operation
$600 Surgeon's Pay/Operation
75 More Operations/Week The Numbers... Expansion Cost=45*$100,000=$4,500,000 Profit Per Operation=$1300-$600=$700
Profit Per Week=$700*75=$52,500 Payback Period= $4,500,000
$52,000 =85.7 Weeks=1.6 Years CALCULATIONS Until Profit Only 3 days not used to full capacity. No capital required.
No construction
Revenue outweighs extra costs PRO's CON'S Decrease in Employee Satisfaction? Decrease in Quality
of Services? QUESTIONS? The End! Potential Profit in 5 years = $6,678,000

Two Options... Add a day of operations. Increase beds by 50% Decrease quality? 90 Beds/Day, 5 Days/ Week Current Capacity=90 Beds 90+(90*50%)=90+45=135 Beds

150 Operations/5 days=30 Operations/Day
Max. Capacity=5 rooms*8 Op's=40 Op's/Day
40 Op's*5 Days=200 Op's/Week

45 New Beds, Max of 10 Occupied Add a day of Operations. Both options would increase productivity. Additional floor could not be fully utilized.
Shouldice quality should not be negatively affected. 5 vs. 6 Day Workweek Weekend Hours
Decrease Job Satisfaction? Add a floor of patient rooms. Capacity Utilization
Rate Capacity Used
Best Operating Level Capacity used=
SUM ∑Daily Capacity=
60+90+90+90+60+30+30=450 Best Operating Level=
Capacity maximum*7 days=90*7=630 Current Capacity utilization rate =...
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