P1 P2 Cost Per month Drug costs $800 $500 Diagnostic hours 6 4 $120/hr Hospital
ID: 2790052 • Letter: P
Question
P1
P2
Cost
Per month
Drug costs
$800
$500
Diagnostic hours
6
4
$120/hr
Hospital days
2
5
$1,000/day
Nursing hours
30
10
$60/hr
Excess capacity
Diagnostic hours
480
Inpatient days
200
Nursing hours
1500
Billing amount
$8,000
$8,000
1) How much gross profit does the hospital make on each procedure?
P1 -
P2 -
How many of each type of procedure should the hospital conduct in order to maximize:
Resource utilization?
P1 -
P2 -
Gross profit?
P1 -
P2 -
Show all calculations.
P1
P2
Cost
Per month
Drug costs
$800
$500
Diagnostic hours
6
4
$120/hr
Hospital days
2
5
$1,000/day
Nursing hours
30
10
$60/hr
Excess capacity
Diagnostic hours
480
Inpatient days
200
Nursing hours
1500
Billing amount
$8,000
$8,000
Explanation / Answer
1.) Calculation of Gross Profit
Particulars
P1
P2
Billing amount
8,000
8,000
Less: Costs
Drug Cost
800
500
Diagnostic hours cost
720
480
Hospital days cost
2,000
5,000
Nursing hours cost
1,800
600
Gross Profit
2,680
1,420
Ranking based on profit
I
II
2.) Utilize the available resources for P1 which is earning maximum profit for each procedure.
No. of procedures can be made in a month
- in diagnostic hours = 480/6 = 80
- in hospital days = 200/2 = 100
- in nursing hours = 1500/30 = 50
Resource allocation for maximising the profit
Particulars
P1
P2
Diagnostic hours
50*6 = 300 hrs
30*6 = 180 hrs
Hospital days
50*2 = 100 days
50*2 = 100 days
Nursing hours
50*30 = 1800 hrs
-
3.) Gross Profit for P1 = 50 units * gross profit per product = 50*2,680 = $134,000.
As there is bottleneck constraint in P2 which is Nursing hours are sufficiently not available nothing can be produced at all.
Particulars
P1
P2
Billing amount
8,000
8,000
Less: Costs
Drug Cost
800
500
Diagnostic hours cost
720
480
Hospital days cost
2,000
5,000
Nursing hours cost
1,800
600
Gross Profit
2,680
1,420
Ranking based on profit
I
II
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