Healthcare Operations Management

  1. Using the materials available at the book’s companion website, investigate and summarize commercially available software solutions for healthcare organizations. Using the forecasting template found on the companion website, forecast total US healthcare expenditures for 2017 with SMA, WMA, SES, trend-adjusted exponential smoothing, and linear trend models.
  1. Which model do you believe offers the best forecast?
  2. Do you see any problems with your model?
  3. Repeat this exercise for hospital care, physician services, other professional services, dental services, home health care, and prescription drugs. According to your findings, do any one of these areas drive the increase in healthcare expense?
  1. Using the Excel inventory template found on the companion website if you choose, and starting with an Excel spreadsheet including data for this problem, which also is available on the companion website, prepare the following exercise. Hospital purchasing agent Abby Smith needs to order examination gloves. Currently, she orders 1,000 boxes of gloves whenever she thinks a need for the item exists. Abby has heard that a better way is available to do her job and wants to use EOQ to determine how much to order and when. She collects the following information.

Cost of gloves: $4.00/box

Carrying costs: 33%, or $ /box

Cost of ordering: $150/order

Lead time: 10 days

Annual demand: 10,000 boxes/year

  1. What quantity should Abby order? Prove that your order quantity is better” than Abby’s by graphing ordering costs, holding costs, and total costs for 1,000, 1,500, and 2,000 boxes.
  2. How often should Abby place the order? Approximately how much time (in days) will elapse between orders? On the web at ache.org/books/OpsManagement4

On the web at ache.org/books/OpsManagement4

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  1. Assuming that Abby is not worried about SS, when should she place her order? Draw another graph to illustrate why she needs to place her order at that particular point.
  1. Abby is concerned that the reorder point she determined is wrong because demand for gloves varies. She gathers the following usage information:
  2. Period (10 days each) Demand

1 274

2 274

3 284

4 274

5 254

6 264

7 264

8 284

9 274

10 294

11 274

12 284

13 264

14 274

Average 274

  1. Abby decides she will be happy if the probability of a stockout is 5 percent. How much SS should Abby carry?
  2. If Abby were to set up a two-bin system for gloves, how many boxes
  3. of gloves would be in each bin?