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Discussion of
Shouldice Hospital Limited Case
Assignment #2:
Questions for Shouldice Hospital Limited
Clinic:
Revenues (($450+ 60 + 75 X 0.20) X6,850) 3,596,250
Cost 2,000,000
Profit 1,596,250
Total Profit 1,837,650
Return on equity
• Total Depreciated Assets: $5 mil
• Return on Asset:
– 1,837,650/5,000,000 = 37%
• What is the return on Asset if they
expand the capacity by 50% at the cost
of $2 mil?
– 1,837,650 x 1.50 / 7,000,000 = 40%
“The Dream World ”
• Shoudice is offering:
– high quality service at low price
• Shodice is having
– Highly satisfied customers
– Happy Employees
• Shouldice is also
– making high profit
How is all of this achieved?
What are the major reasons for the
success?
• Location
– large city near air port -> access to worldwide
market
– large local population to fill up cancelled bookings
• Capacity planning
– Elective procedures -> scheduled operations
– Balancing Capacity and improving capacity
utilization
– Needs to increase capacity
The Capacity Decision
• Where is the bottle neck?
• How should they increase the
capacity?
• How should they implement that
change?
Shoudice Hospital Limited: Analysis of Capacity
Current Throughput
• 6,850 Operations/50 weeks = 137 operations/week
• ( with a peak of 165/week)
Capabilities
• Examination Rooms:
• (6 rooms x 3 hrs (1-4 PM) x 5 days x 60 min/hr) / (20 min / exam) = 270
patients /week
• Admitting Procedure:
• (2 people x 4 hrs (1-5 PM) x 5 days/week x 60 min/hr) / (10min/patient) = 240
patients/week
• Nursing Station:
• (2 stations x 4 hrs (1-5 PM) x 5 days/week x 60min/hr)/(10 min/patient)=240
patients /week
Shoudice Hospital Limited: Analysis of Capacity
Capabilities
Operating Rooms:
• (5 rooms x 8.5 hrs/room/day x 1.1 hrs/patient x 5 days/week)/ =
188 patients /week
• Surgeons:
• 11 surgeons x 3.5 operations /day x 5 days = 178 patients/week
• Hospital rooms: (see transparency)
• 89 rooms = 134 patients per week (assuming use of weekends for
convalescence and 3.5 days average stay)
• 103 rooms = 148 patients (assuming use of weekend for
convalescence, 3.5 days average stay, and use of 14 “hostel”
rooms for two nights each week)
How to expand the capacity?
• Aim : increase capacity & maintain control
of service quality
• Alternatives:
– Add Saturday operations
– Add a new floor (45 more hospital beds)
– Establish a new facility for hernia
– Expand to other types of operations
– Others?
Please Help Shoudice to make the
Decisions
• Facilitating Goods:
– Medical supplies
– Food, medicine etc.
• Explicit Services
– Quality hernia surgery using the Shouldice method,
low recurrence
– Very experienced doctors
Shoudice Hospital’s Service Package
• Implicit Services
– Peace of mind/low risk
– Independence/Dignity/Control
– Social experience, fraternity
– Excused absence from work without guilt
– A vocation
Shoudice Hospital’s Distinctive
Characteristics
• Customer Participation in the Service
Process
• Simultaneity
• Intangibility
• Perishability
• Heterogeneity
END
Thank You