Given the capacity planning discussion in the text what approach is being taken by Arnold Palmer hospital toward matching capacity to demand?

Answer 1

Case Study Capacity planning at Arnold Palmer Hospital

January 5

2011

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Arnold Palmer Hospital

Arnold Palmer Hospital "A Very Special Baby"

Conversations in the late 1970's between pediatricians Andrew Townes Jr., MD, Ben Guedes, MD, and Colin Condron, MD, led to the decision several years later to build what has become the only healthcare facility dedicated solely to the care of children and women in the Southeast.

"We started out by forming the Children's Medical Foundation of Greater Orlando in February 1980," explains Dr. Townes. "Judge Joseph DuRocher drafted the first articles of incorporation." After only two meetings, the group changed its name to the Children's Hospital Foundation and added physicians Charles Price, MD, Richard Signer, MD, Stanley Hand, MD, Arthur Raptoulis, MD, Joseph Chiaro, MD, Jack Facundus, MD, Ronald David, MD, and Michael Pollack, MD. James Page, Jr., donated his services as corporate attorney.

All pledged $1,000 each to pay for a feasibility study. Unfortunately, not enough money was raised. The group persuaded Ross Laboratories, which specializes in pediatric and obstetric healthcare products, to conduct the study and absorb the $40,000 cost. One of the things they said is that special services for women, as well as children, should be included to make the hospital more successful. "About that time ORMC heard what we had in mind and decided they would do it," says Dr. Townes.

Renowned golfer Arnold Palmer, firmly tied to the Orlando area by the 1980s, was looking for a charity to support when he was approached by ORMC. "Arnold was insistent that it be top quality in every respect," says Rex McPherson. "It is a real pleasure to see what has been accomplished. This hospital represents a labor of love on the part of a lot of people. Before we opened the new hospital, we had to send kids to , Miami, wherever, because there was no children's hospital here."

Capacity planning at Arnold Palmer Hospital

Since opening day the Arnold palmer hospital has experienced an explosive growth in demand for it services .

one of only sisx hospital in the US to specialize in hearth cared for over 1500000 patients who come to the Orlando facility from all 50 states and more than 100 countries.

with patient satisfaction scores in the top 10% of U.S. hospital surveyed over 95% of patients would recommend the hospital to other

one of Arnold palmer hospital's main focuses is delivery of babies . originally built with 281 beds and capacity for 6500 births per year . the hospital steadily approached and then passed 10000 births.

With continuing population growth in its market area serving 18 central Florida counties. Arnold palmer hospital was delivering the equivalent of a kindergarten class of babies every day and still not meeting demand. supported with substantial additional demographic analysis . With continuing population growth in its market area the hospital was ready to move ahead with a capacity expansion plan and new 11 story hospital building across the steet from the existing facility.

Thirty-five planning teams were established to study such issues as (1) specific forecasts (2)services that would transfer to the new facility (3) services that would remain in the existing facility (4) staffing needs (5) capital equipment (6) pro forma accounting data and (7) regulation requirement .

Ultimately Arnold palmer Hospital was ready to move ahead with budget of $100 million and a commitment to addition 150beds. But given the growth of the central Florida region .

Swanson decided to expand the hospital in stage ; the top two floors would be empty interiors ("shell")to be completed at later date, and the fourth- floor operating t room could be doubled in size when needed . "with the new facility in place ,we are now able to handle up to 16,000 births per year" says Swanson .

1. Given the capacity planning discussion in the test what approach is being taken by Arnold planer Hospital toward matching capacity to demand ?

A.Leading strategy

Management leads capacity in periodic increments. Management could also add enough capacity in one period to handle expected demand for multiple periods.

B. Lag strategy

Here management lags (chases) demand

C. Straddle Strategy

Here management uses average capacity increments to straddle demand

Arnold planer Hospital take Straddle Strategy toward matching capacity to demand ?

2. What kind of major changes could take place in Arnold planer Hospital's demand forecast that would leave the hospital with an underutilized facility ( namely , what are the risks connected with the capacity decision ?

What kind of major changes could take place in Arnold Palmer Hospital' demand forecast that would leave the hospital with an underutilized facility (namely, what are the risks connected with this capacity decision)?

Changing in capacity will have sales and cash flow implications, it also have quality, supply chain, human resource, and maintenance implications. All must be considered to avoid any future failing or decreasing in revenue, which would be occurred by poor decision.

To avoid any risk there are four special considerations for good capacity decision

1. Forecast demand accurately, where a precision study must be prepared before applying the new plan, which studies specific issues such as

• Services that would transfer to the new facility

• Services that would remain in the existing facility

• Staffing needs

• Capital equipment

• Pro forma accounting data

• Regulatory requirements

These things if are considered that will lead to good decision.

2. Understanding the technology and capacity increment. After determining the volume, technology decision may be aided by analysis of cost, human resources required and quality.

3. Find the optimum operation size, where technology and capacity increments often dictate an optimal size for a facility.

4. Build for change. In our fast-paced world, change is inevitable, so buildings and equipments should be designed with modifications in mind to accommodate future changes.

As a conclusion, any changes in the following factors will influence the demand

• Technology

• Competitors

• Building restrictions

• Cost of capital

• Human resource options

• Regulations

3. Use regression analysis to forecasts the point at which Swanson needs to "build out " the top two floors of the new building. namely, when demand will exceed 16,000 births .

= a + b x

=

= 9650.35

= a + b x X = 16000 births

= 0.001395 + 1988.03 x 16000

= 2010.36

The demand will exceed 16,000 births during 2010.

Answer 2

If you are talking about operations management. The correct answer is leading demand with incremental expansion.