The increase the capacity by 20% by adding

The Capacity issueThe issue is that Dr. Shouldice is seeking ways to increase the capacity of the Shouldice hospital without decreasing the quality of the service that delivered to its patents. The Management of Shouldice hospital has been thinking of expanding the plant’s capacity to serve tremendous unsatisfied patents demand. They have two options to expand the hospital capacity. The first option is to increase the capacity by 20% by adding Saturdays to the operations of the existing five days. Adding one more day per week for operations would increase the utilization rate. To illustrate that, the hospital has 630 available beds per week ( 90 beds x 7 days per week = 630 available beds per week). The hospital does between 30 to 36 operations per day on average 33 operation per day and patients stay approximately 3 days at the hospital.   •    89 beds available per day x 7 days per week = 623 beds available per week•    33 patients x 3 stay days x 6 days per week = 594 beds utilized per week•    594 beds utilized per week  / 623 beds available per week  = 95.3% Thus, by adding more operations on Saturday the utilization rate of beds use will increase from 79.4% to 95.3%. Adding Saturdays would not require capital nor constructions. However, the hospital might fail to maintain the employees and patient’s satisfaction.  The second option is to invest $4 Million to expand the current number of beds by 50% which is (89 x 50%) = 45 bed. Adding this huge number of beds to the facility would require heavily schedule for the operation rooms. However, the management wants to keep control over the quality service that the hospital delivered. They think are already achieving a great capacity utilization. Also, their staff and doctors are satisfied with their job and the patients are pleased with the hospital service.  The administration believes that expanding the capacity of the hospital might make it difficult to keep the same quality of service.