Concept explainers
Videos
Question
JIT at Arnold Palmer Hospital ☆ Video Case
Orlando’s Arnold Palmer Hospital, founded in 1989, specializes in treatment of women and children and is renowned for its high-quality rankings (top 10% of 2000 benchmarked hospitals), its labor and delivery volume (more than 16,000 births per year), and its neonatal intensive care unit (one of the highest survival rates in the nation). But quality medical practices and high patient satisfaction require costly inventory—some $30 million per year and thousands of SKUs.*
With pressure on medical care to manage and reduce costs, Arnold Palmer Hospital has turned toward controlling its inventory with just-in-time (JIT) techniques.
* SKU 5 stock keeping unit
Within the hospital, for example, drugs are now distributed at nursing workstations via dispensing machines (almost like vending machines) that electronically track patient usage and post the related charge to each patient. The dispensing stations are refilled each night, based on patient demand and prescriptions written by doctors.
To address JIT issues externally, Arnold Palmer Hospital turned to a major distribution partner, McKesson General Medical, which as a first-tier supplier provides the hospital with about one-quarter of all its medical/surgical inventory. McKesson supplies sponges, basins, towels, mayo stand covers, syringes, and hundreds of other medical/surgical items. To ensure coordinated daily delivery of inventory purchased from McKesson, an account executive has been assigned to the hospital on a full-time basis, as well as two other individuals who address customer service and product issues. The result has been a drop in Central Supply average daily inventory from $400,000 to $114,000 since JIT.
JIT success has also been achieved in the area of custom surgical packs. Custom surgical packs are the sterile coverings, disposable plastic trays, gauze, and the like, specialized to each type of surgical procedure. Arnold Palmer Hospital uses 10 different custom packs for various surgical procedures. “Over 50,000 packs are used each year, for a total cost of about $1.5 million,” says George DeLong, head of Supply-Chain Management.
The packs are not only delivered in a JIT manner but packed that way as well. That is, they are packed in the reverse order they are used so each item comes out of the pack in the sequence it is needed The packs are bulky, expensive, and must remain sterile. Reducing the inventory and handling while maintaining an assured sterile supply for
Here is how the supply chain works: Custom packs are assembled by a packing company with components supplied primarily from manufacturers selected by the hospital, and delivered by McKesson from its local warehouse. Arnold Palmer Hospital works with its own surgical staff (through the Medical Economics Outcome Committee) to identify and standardize the custom packs to reduce the number of custom pack SKUs. With this integrated system, pack safety stock inventory has been cut to one day.
The procedure to drive the custom surgical pack JIT system begins with a “pull” from the doctors’ daily surgical schedule. Then, Arnold Palmer Hospital initiates an electronic order to McKesson between 1:00 and 2:00 P.M. daily. At 4:00 A.M. the next day, McKesson delivers the packs. Hospital personnel arrive at 7:00 A.M. and stock the shelves for scheduled surgeries. McKesson then reorders from the packing company, which in turn “pulls” necessary inventory for the quantity of packs needed from the manufacturers.
Arnold Palmer Hospital’s JIT system reduces inventory investment, expensive traditional ordering, and bulky storage, and supports quality with a sterile delivery.
2. How might the procedure for custom surgical packs described here be improved?
Want to see the full answer?
Check out a sample textbook solution
Chapter 16 Solutions
MyLab Operations Management with Pearson eText -- Access Card -- for Operations Management: Sustainability and Supply Chain Management
- The World Trade Organization is the only global trade organization and has 164 member nations representing 98 percent of world trade. How does the WTO help nations improve trade relations? What are some of the major challenges facing the WTO today?arrow_forwardWhat is a good example of a letter of recommendation for a 5th grade Language Arts Teaching Position at an elementary school from a school principal?arrow_forwardProblem 1 (10 Points) Davison Electronics manufactures three LED television monitors, identified as Model A, Model B, and Model C. Davison Electronics four manufacturing plants. Each model has its lowest possible production cost when produced at Plant 1. However, Plant 1 does not have the capacity to handle the total production of all three models. As a result, at least some of the production must be routed to the other manufacturing plants. The following table shows the minimum production requirements for next month, the plant capacities in units per month, and the production cost per unit at each plant: Model Production Cost per Unit Minimum Production Requirements Plant 1 Plant 2 Plant 3 Plant 4 A $25 $28 $37 $34 48,000 B $26 $35 $36 $41 75,000 C $20 $31 $26 $23 60,000 Production Capacity 65,000 50,000 32,000 43,000 Davison’s objective is to determine the cost-minimizing production plan. We have…arrow_forward
- Lead Story: Identify the key story or insight based on your visualizations. Shaffer’s 4C Framework: Describe how you applied Shaffer’s 4C principles in the design of your charts. Gestalt Principles or Preattentive Attributes: Explain how you applied at least one Gestalt principle or preattentive attribute in your chartarrow_forwardFor the purpose of process analysis, which of the following measures would be considered an appropriate flow unit for analyzing the main operation of a local accounting firm? Instructions: You may select more than one answer. a. Number of accountants working each week b. Number of tax returns completed each week c. Number of customers with past-due invoices d. Number of reams of paper received from suppliersarrow_forward4. Based on the data provided in Table 2.5, what is the flow rate of callers from 8:00 a.m. to 8:20 a.m.? TABLE 2.5 Time Stamps of the Eight Callers Who Called from 8:00 a.m. to 8:20 a.m. to the Reservation Desk of a Ferry Service Caller Time In Time Out 1 8:01 8:05 2 3 4 5 6 8:02 8:07 8:06 8:08 8:09 8:12 8:10 8:15 8:12 8:20 7 8:16 8:19 8 8:17 8:19 5. Based on the data provided in Table 2.5, what is the flow time of callers from 8:00 a.m. to 8:20 a.m.? 6. Based on the data provided in Table 2.6, what is the flow rate of customers from 9:00 a.m. to 10:00 a.m.? TABLE 2.6 Time Stamps of 10 Customers Who Visited a Local Bank Branch from 9:00 a.m. to 10:00 a.m. Customer 1 2 3 4 5 6 7 8 9 10 Time In Time Out 9:01 9:07 9:06 9:21 9:08 9:20 9:14 9:19 9:20 9:28 9:26 9:33 9:31 9:39 9:40 9:46 9:44 9:59 9:53 9:57 7. Based on the data provided in Table 2.6, what is the flow time of customers from 9:00 a.m. to 10:00 a.m.?arrow_forward
- How is Little’s Law currently used in today’s supply chains? Provide an example of where it is used.arrow_forwardHow would you Briefly state your views on music for a Christian school interview?arrow_forward3) Rane Brake Linings manufactures brake pads in a process focused facility; the fixed costs are nine thousand dollars per year, the variable cost is fifty dollars per brake pad, each brake pad sells for two hundred dollars. a) Calculate the breakeven point (in units) for this operation. b) Calculate the breakeven point (in $) for this operation. c) Calculate the profit/loss on a demand of two hundred brake pads per year. Note: You could work out the problem by hand or use excel; in chapter 5, section 5.11 of the Stevenson text, evaluating alternatives (cost volume analysis) is covered with examples; chapter 5 Stevenson lecture power point slides 34 to 44 (chapter 5 lecture: 29.49 mins to 38.87 mins) cover cost volume analysis with examples.arrow_forward
- 1. For the purpose of process analysis, which of the following measures would beconsidered an appropriate flow unit for analyzing the operation of a coffee shop?Instructions: You may select more than one answer. a. Square footage of the store b. Number of employees working each week c. Number of hours the store is open each week d. Number of customers served each weekarrow_forwardLO2-1 1. From the perspective of process analysis, which of the following could be appropriate flow units for a hardware store? a. Number of workers b. Number of cash registers c. Number of customers d. Number of suppliers page 37 2. Over the course of a month, which of the following is most likely to describe an appropriate flow unit for a process analysis of a hospital? a. The number of physicians b. The number of beds c. The square footage of the building d. The number of patients LO2-2 3. At a cruise ship terminal, each day on average 1000 passengers embark on ships. On average, passengers spend 5 days on their cruise before returning to this terminal. If the flow unit is a passenger, then what are the flow rate and flow time of this process? 4. It is election day and 1800 voters vote in their precinct’s library during the 10 hours the polls are open. On average, there are 15 voters in the library and they spend on average 5 minutes in the library to complete their voting. What is…arrow_forwardWhat do you feel is the most effective way to communicate with families? Describe how you have used this/these technique(s).arrow_forward
Practical Management ScienceOperations ManagementISBN:9781337406659Author:WINSTON, Wayne L.Publisher:Cengage,
Purchasing and Supply Chain ManagementOperations ManagementISBN:9781285869681Author:Robert M. Monczka, Robert B. Handfield, Larry C. Giunipero, James L. PattersonPublisher:Cengage Learning
MarketingMarketingISBN:9780357033791Author:Pride, William MPublisher:South Western Educational Publishing