Arnold Palmer Hospital Case Study
1. The case study indicates that the approach to match capacity to demand utilized by Arnold Palmer Hospital must be approach (a), leading demand with an incremental expansion. The reason for this is that it is evident that Arnold Palmer Hospital is attempting to acquire capacity to stay ahead of demand, or in other words by leading capacity, on account of the fact that the opening of the new 11-store hospital building will increase yearly birthing capacity to 16,000, which is far above the estimated 13,600 births expected during 2007, as shown by Table S7.3. Furthermore, the fact that the hospital and Swanson in particular is choosing to follow a multi-stage approach in terms of the hospital’s expansion in which the top two “shell” floors will remain empty until a later time while the fourth-floor operating room can be doubled in size if necessary indicates that they are choosing to specifically follow an incremental approach. That is, the hospital is choosing to open the new hospital while leaving the top two floors empty, which will satisfy expected demand for a given amount of time until demand increases some more, at which point the top floors will be completed and the fourth-floor may be doubled. Thus, the new capacity will be acquired at the beginning of year X and also at the beginning of year Y, as demand grows. 2. Building a new 11-story hospital building with a capacity to accommodate 2,400 more births than is even projected for the next year (i.e. 2007) is undoubtedly a risky operation. This is also not taking into consideration that the addition of the top two floors will add even a greater capacity on top of the 16,000 per year that is expected even without the use of those two floors. There are many changes that may occur which may negatively result in the hospital having an underutilized facility. For instance, Arnold Palmer Hospital holds a very high patient satisfaction at over 95% and patient...
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