Chapter 7.S, Problem 3VC

a capacity expansion plan and a new 11-story hospital building across the street 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) regulatory- requirements. Ultimately, Arnold Palmer Hospital was ready to move ahead with a budget of S100 million and a commitment to an additional 150 beds. But given the growth of the central Florida region. Swanson decided to expand the hospital in stages: the top two floors would be empty interiors ("shell”) to be completed at a later date, and the fourth-floor operating 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.

Discussion Questions*

1. Given the capacity planning discussion m the text (see Figure S7.6), what approach it being taken by Arnold Palaver Hospital toward matching capacity to demand?

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

3. Use regression analysis to forecast 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

*You may wish to view the video that accompanies the case before addressing these questions.

TABLE S7.4 Births at Arnold Palmer Hospital

YEAR	BIRTHS
1995	6,144
1996	6,230
1997	6,432
1998	6,950
1999	7,377
2000	8,655
2001	9,536
2002	9,825
2003	10,253
2004	10,555
2005	12,316
2006	13,070
2007	14,028
2008	14,241
2009	13,050
2010	12,571
2011	12,978
2012	13,529
2013	13,576
2014	13,994