Problem
As part of the new efforts to prepare for bio-hazard emergencies, the City Medical Center (CMC) has introduced a new procedure to test patients for a variety of infections. The equipment has been installed in a bus that drives around the city and can park in a different spot each day. The service is open from 8am to 8pm, and operates continuously with no break. It takes an average of 15 minutes to screen each patient. Because the service is new, initially only two patients arrive at the bus per hour, on average. CMC charges each patient $75 for the screening.
1. Find the utilization of the bus, the expected number of patients in the bus (being screened and waiting for screening), the expected total time a patient spends in the bus (waiting plus screening) and the expected revenue per day.
2. CMC would like to attract more patients to ensure that the two beds in the bus are fully utilized. If there are more than two patients, the others have to wait outside. Although this is possible, CMC would prefer to limit the average number of patients in the system to two (including the patient being screened). They realize they can increase the arrival rate of patients by charging a lower price. Preliminary market research suggests that the arrival rate λ depends on price p according to the following relationship: λ = 8 - 8p /100 . So, with the current price of p = $75 per patient, they expect an arrival rate of λ = 2 patients per hour, as in part (1). What price should CMC charge in order to increase the average number of patients in the system to two, and what is the resulting arrival rate?
3. If CMC's objective is to maximize revenues from the screening operation, what price should they charge?
4. Make 5 suggestions on how to improve the waiting time experience at any service facility.
5. Give five reasons why accounting cost figures can be misleading for operations purposes.