Economics

QMB6616: Business Process & Operations Analysis

MIDTERM

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Name

Panther ID _______________

DURATION OF EXAM: 2 HOURS (DUE MONDAY 9/23 11:59PM)

Instructions (READ CAREFULLY):

  1. There are THREE sections in the midterm exam. 2. Immediately print your name and Panther ID on the top of first page of the exam. 3. Read all questions carefully before you begin answering. Make sure you show

calculations to obtain full credit. 4. No questions are answered during the exam period. If you have a question about the

“correct” interpretation of some aspect of the assignment, you should just state your assumption and continue to work. These statements of logic will be used in the evaluation of your submission.

Please sign the following pledge below:

“I pledge my honor that I have neither received nor provided unauthorized assistance during the completion of this work.”

Name (printed) Signature

Date

Section Available

Points

Points Deducted

Points Obtained Process Analysis 60 Queuing Systems 20 Inventory Management 20

Page 2 of 10

QMB6616 Midterm – NAME ________________________________ FIU ID ___________________

Part 1 – MedNOW Clinic (60 points)

The MedNOW clinic provides convenient healthcare services for a wide range of non- emergency medical issues. The clinic is located in Miramar in close vicinity to a large hospital and serving a population with diverse ethnic backgrounds. Patients can walk-in or call in advance to schedule an appointment. The clinic operates 7AM to 7 PM on weekdays, with extended opening hours during the weekend. The clinic can do basic x-rays including chest x-ray and extremity x-rays (such as ankle, foot, arm and leg) and also provides lab services. On average 20 patients arrive at the clinic per hour, including walk-ins and appointments.

Registration – The registration desk is continuously staffed with one person. They call the patient from the waiting room and create a patient record. The patient is then told to go back to the waiting room. The registration process takes on average one minute.

Triage – The triage nurse calls the patients from the waiting room. They create a patient chart and register the check-in time. During triage the nurse determines the priority of patients’ treatments based on the severity of their condition. The triage is staffed with one registered nurse (RN) and the average time for triage is about 2 minutes. On average, 10% of the patients require medical care that is not available at the clinic and need to be sent to a hospital in the vicinity of the clinic. The other patients are told to go back to the waiting room and wait for the doctor call.

Examination – The clinic has four examination rooms and four MDs available at all time. An assistant calls the patients into the examination rooms and help the patient prepare for the examination. The examination time is highly dependent on the medical condition. Based on historical records the clinic has determined the following distribution for examination time:

Probability 0.4 0.4 0.2 Time 2 minutes 8 minutes 10 minutes

In 50% of cases the MD completes the diagnosis, writes a prescription and the patient is ready to discharge. The other 50% of patients require some form of diagnostic and are sent to the medical diagnostic lab.

Medical Diagnostics – There are three areas of medical diagnostic testing each with its own staff. Analysis of historical records produced the following information regarding demand for diagnostics and test time:

Diagnostic 1 Diagnostic 2 Diagnostic 3 Test time 6 minutes 8 minutes 30 minutes Proportion of test requests 5 in 9 1 in 3 1 in 9

Page 3 of 10

QMB6616 Midterm – NAME ________________________________ FIU ID ___________________

After the diagnostic test the patient is sent back to the waiting room and waits the doctor call.

Re-examination – After diagnostics testing the MDs examine the test results sent by medical diagnostics. The analysis of the diagnostic results takes on average 6 minutes per patient. Then the MD calls the patient and spends on average an additional 6 minutes debriefing or prescribing treatment. The patient is then sent to the discharge desk.

Discharge – The discharge desk is staffed with one person. They copy key information from the patient chart to the patient record system. On average it takes 2 minutes to complete the discharge process for one patient.

Assignment: Management is concerned with the ability of the clinic to meet expected demand in an efficient manner while providing adequate level of service. An internal PI team has been put together to identify opportunities to improve patient flow at the clinic. Their report lists the following possibilities:

  1. Cross-train admin staff to work at both the registration and discharge stations 2. Cross-train the RN to do admin work associated with registration 3. Cross-train RN to handle some examinations and make routing decisions currently made

my MDs. 4. Buy additional testing equipment 5. Hire additional MDs

MedNOW has hired you as a consultant to assist with the analysis of the clinic’s service delivery. They presented a set of specific questions below that would like to see addressed.

  1. Draw the process flow diagram for the entire process at the MedNow Clinic. Follow

formal notation to depict the workflow and show task times on the diagram (10 points).

Page 4 of 10

QMB6616 Midterm – NAME ________________________________ FIU ID ___________________

  1. How many patients can be processed at the clinic on a daily basis? What is the

bottleneck of the process? Show your work. (20 points)

  1. Consider the MD examination station. Why do customers have to wait for an MD? (5

points)

Page 5 of 10

QMB6616 Midterm – NAME ________________________________ FIU ID ___________________

  1. Consider the five proposals for process change suggested by the PI team. How does

each proposal impact MedNow capacity? Explain briefly (20 points).

  1. Which initiative would you recommend for implementation? Explain (5 points).

Page 6 of 10

QMB6616 Midterm – NAME ________________________________ FIU ID ___________________

Part 2 – Queuing Systems (20 points)

Sweet Dreams Hotel is business traveler oriented hotel located next to one of the major convention centers in Boston. The hotel offers a range of amenities that satisfy the basic needs of the business traveler, including TV and high-speed internet and attracts price-conscious business travelers who want a confortable sleep and have little time to waste.

The hotel manager has noticed that the day before large conventions a large number of guests tend to arrive between 6- 9PM creating great havoc at the check-in desk. She decided to collect some data regarding the arrival pattern and the service time at registration to gain better insight into the problem. Data collected over the previous two months showed that on average 18 guests arrived at the hotel per hour during the peak period of 6- 9pm. The check-in desk is handled by a single clerk in each day or night shift, who checks-in one guest at a time by order of arrival. About 50% of the guests are enrolled in the loyalty program, for those guests the average time to complete check in is 2 minutes. For the remainder of the guests the check-in process takes on average 4 minutes. Assume both service time and inter-arrival time have exponential distribution.

  1. The hotel policy is that guest should be able to check-in in less than 5 minutes.

Given current conditions how long do guests have to wait on average before check-in? Is it hotel meeting its policy? (5 points)

Page 7 of 10

QMB6616 Midterm – NAME ________________________________ FIU ID ___________________

  1. The hotel manager asked the check-in clerks for suggestions to improve service performance. After a very participated brainstorming session the group has presented the following five recommendations.

Recc A: Hire a temp employee who would assist the clerk with the registration of guests during check-in. The additional clerk would enable to reduce the average service time for guests who are not enrolled in the loyalty program to 2 minutes.

Recc B: Invest in a self-check in kiosk, which would be placed in the hotel lobby Customers can check in at the interactive kiosk, which provides then with their room number and a room key. It is estimated that on average it will take 2 minutes for a customer to complete the check in at the kiosk.

Recc C: Develop a mobile app that enables customers to check-in online. Change every single room door lock at the hotel to enable opening the room door by punching a code on a keypad. Customers sign in from their smartphone, tablet or computer, and receive a confirmation email including the room number and a private code. Then the private code can be used to open the room.

The hotel manager has asked you to assess each recommendation in terms of its predicted impact on the check-in operation during the peak time of 6-9PM. How and why would you expect the parameters and measures of performance in the first column of the table to change? Indicate for each option whether you expect an Increase, Decrease, No Change, or Cannot Tell, and explain why. Please be specific in your explanations. (10 points)

Note: There is no need to quantify impacts to answer this question.

Option A Option B Option C Arrival rate at check-in during peak time Service rate at check-in Waiting time at check-in Customer Satisfaction with check-in service

Page 8 of 10

QMB6616 Midterm – NAME ________________________________ FIU ID ___________________

  1. Consider recommendations A and B presented above.
  2. a) Would recommendation A enable the hotel to meet its policy regarding waiting time? (5 points)

EXTRA POINTS

For recommendation B, the installation of a kiosk for self check in, what percentage of customers would have to switch from check-in at the desk to self-check in at the kiosk to meet the hotel policy of check in under five minutes? (5 points)

Page 9 of 10

QMB6616 Midterm – NAME ________________________________ FIU ID ___________________

Part 3. INVENTORY MANAGEMENT (20 POINTS TOTAL)

The annual demand for admission kits for patients with infectious conditions such as methicillin-resistant staphylococcus aureus (MRSA) and C-diff is 2,200. The purchase price of a kit is $80. The holding cost per unit per year is 20% of the item’s price, and the cost of placing an order is $20. Currently, the kits are ordered by the supply team in quantities of 50 and delivered by the supplier two weeks later. Demand is uncertain and the standard deviation of weekly demand is 15.

  1. Calculate the Economic Order Quantity (EOQ) for admission kits (4 POINT)
  2. How many orders will be placed over a full year if they adopt EOQ? (4 POINT)
  3. Determine the annual ordering, holding and total costs for the EOQ quantity (4 POINT)

Page 10 of 10

QMB6616 Midterm – NAME ________________________________ FIU ID ___________________

  1. Determine the total annual cost associated with the quantity currently ordered by the

supply team. Which cost (holding or ordering) is higher and why? (2 POINT)

  1. Should the supply team change the frequency of orders to their supplier? Please

explain. (2 POINT)

  1. Should the hospital carry any safety stock of admission kits? Explain. (4 POINT)

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