Reference no: EM131186942

EXERCISES

Question 1. Using the information in Table 12-7, construct a PERT network and answer each of the following questions:

a. What is the expected project completion data?

b. What is the scheduled start and completion date for each activity?

c. Which activities are on the critical path?

d. How long can noncritical path activities be delayed without jeopardizing the overall completion date for this project?

Question 2. Assess the impact of the following changes to the time estimates provided in question 12-1. individually, what is the impact if

Activity                                 Predecessor         New Time Estimate

O. Advertise for new staff          N                                 4
P. Interview for new staff          O                                 6
Q. Select new staff                     P                                 1

Collectively, what is the impact of these changes?

Question 3. As project manager for the example included in question 12-1, what would you recommend to preserve the original project completion date if activity A was reestimated to take 8 weeks, not the original 4 weeks? Provide details.

Table 12-7 Project to Convert a 20-Bed unit in a Nursing Home in Accommodate Patients with Dementia

Activity	Predecessor Time estimate(weeks)	Predecessor	Time estimate(weeks)
A	Secure state approval	-	4
B	Identify 20-bed unit to be used	A	1
C	Move existing residents	B	1
D	Clean space	C	2
E	Develop architectural plans	A	9
F	Install new heating and ventilation systems	E	4
G	Install security systems	E	2
H	Move walls; renovate	F	4
I	Identify new equipment	A	1
J	Order new equipment	I	1
K	Unpack and inspect new equipment	J	1
L	Install new equipment	D,K,H	3
M	Reassign staff	A	1
N	Identify new staffing needs	M	1
m	Advertise for new staff	N	3
P	Interview for new staff	O	2
Q	Select new hires	P	3
R	Develop care plan protocols	M	1
S	Train staff	R,O,M,L	1
T	Modify quality assufance plans	S	2
U	Coordinate with hospital discharge planners	T	4
V	Complete internal audit	U,G	1

Question 4.

A representative of a reputable financial services company has approached you as manager of a four-person group of anesthesiologists with an oppor¬tunity to purchase a 10-year annuity due for each member of the group. The annuity due would pay $40,000 each year beginning 5 years from now (i.e., at time 5). What is the most you would be willing to pay now, per each physician, for this investment? Assume an appropriate discount rate of 7%.

Question 5.

The hospital's marketing and finance departments have just provided you, as chief financial officer, with pro forma income statements for your proposed sonogram center. These statements appear in the following.

Pro forma Income Statement (000)
Time	t+ 1	t + 2	t  +  3	t + 4
Service Revenues (net)	$425	$500	$580	$700
Expenses	$400	$450	$525	$600
Depreciation Expense	$35	$35	$35	$35
Net Income	($10)	$15	$20	$65

What is the project's IRR? Assume an initial investment of $175,000 and an appropriate discount rate of 6%, The hospital is operated as a not-for-profit facility.

Question 6.

The chief operating office(COO) of a small, not for profit community hospital has to make a recommendation to the board of trustees on choosing among three project options for an unrestricted gift of $250,000 that has just been received. The board has established a time horizon of 5 years on this project. The options are described in the following.

a. Purchase a 5-year treasury note at an interest rate (annual) of 7%.

b. Purchase the practice of a young physician (the hospital's third highest admitter). Estimates of projected cash flows for the practice (post-purchase), are:

Probability of Cash Flow

Time	60%	20%	20%
t + 1	$40,000	$20,000	$60,000
t + 2	$60,000	$30,000	$80,000
t + 3	$75,000	$40,000	$100,000
t + 4	$100,000	$50,000	$125,000
t + 5	$100.00	$50,000	$125,000

c. Purchase, an upgraded analyzer for the laboratory. Based on forecasts of laboratory utilization, the net cash flows for this project are:

Time    Net Cash Flow
t + 1    $75,000
t + 2    $75,000
t + 3    $50,000
t I 4    $50,000
5         $50,000

Which investment should the COO recommend and why?

Question 7. Using the following data, prepare a run chart, scatter chart, and control chart, A late surgery is defined as any surgical operation that was started more than 30 minutes after its scheduled time.

Table 14-4 Number of Late Surgeries

Month	Number of Surgeries	Number of Late Surgeries
January	435	112
February	401	129
March	572	186
April	409	103
May	577	89
June	329	67
July	467	156
August	301	94
September	236	89
October	325	127
November	378	156
December	444	124
Total	4873	1432

In March the number of medically complicated births was 20. The moving range, expressed as an absolute number, for February-March is the absolute difference or 7, not -7. A chart can be used to examine the moving ranges, the month-to-month variation that may be occurring.

Calculate the moving range by time interval (e.g., month), sum the differences, and then divide this sum by the number of range calculation. In the example, divide by 11 to determine the average moving range. For the example, the average moving range is 5.5 births,

The upper control limit for a moving range chart (of individual values) is the average moving range X 3.27-3.27 is a constant, just as 1.96 is the constant used to calculate a 95% confidence interval when we use the central limit theorem.

In our example, therefore, the upper control limit for the moving range chart is:

Average Moving Range = 5.5 X (the constant) 3.27 = 17.985

For this control chart, 17.985 is the upper threshold limit used to evaluate the variation presented in the time series analysis we have been using involving medi¬cally complicated births. It is the upper boundary or control limit. Given the nature of this chart there is no lower limit.

Question 8. Using the following data set on hospital admissions, define the service area for Hospital A, based only on quantitative factors (Table 15-5).

Question 9. Compute the target bed capacity of Cheswick Community Hospital 10 years from now, based on the following information:
Assume current population of Cheswick Community Hospital's service area = 145,000

Assume projected population increase of 8% in service area over the next 10 years.

Table 15-5 Hospital Admissions, by Community

Community	Hospital A	Hospital B	Hospital G	Other Hospitals
North	45	64	76	123
South	159	324	12	521
East	65	24	137	311
West	145	68	95	113
Central	32	56	78	159
Upper	29	84	45	814
Lower	37	14	8	57

Assume a future admission rate per 1000 of 102.

Assume average length of stay of 4.7 days in 10 years. Assume a target occupancy rate of 78% in 10 years.

Question 10. Newgroveton is a community of 445,000. In the most recent year, there were 750 new cases of disease A in the community. Assume the expected inci¬dence rate for disease A is 245 per 100,000 people. Was the community's experience better or worse than expected? Explain your answer.

Table 15-6 Exercise 15-4

Specialty	Number of Physicians	Number Currently Aged 60-65
General Practice	90	18
Pediatrics	38	6
General Surgery	41	2
OB/GYN	50	6

Assume the following target ratio of physicians per 100,000 people. Specialty Target Physician Ratio per 100,000

General Practice                                31

Pediatrics                                          18

General Surgery                                13

OB/GYN                                             14