Koehler Vision Associates (KVA) specializes in laser-assisted corrective eye surgery. Prospective patients make appointments for prescreening exams to determine their candidacy for the surgery: if they qualify, a $250 charge is applied as a deposit for the actual procedure. The weekly demand is 150, and about 12% of prospective patients fail to show up or cancel their exam at the last minute. Patients that do not show up are refunded the prescreening fee less a $25 processing fee. KVA can handle 125 patients per week and is considering overbooking its appointments to reduce the lost revenue associated with cancellations. However, any patient that is overbooked may spread unfavorable comments about the company; thus, the overbooking cost is estimated to be $125. Develop a spreadsheet model for calculating net revenue.
a. Find the net revenue and number overbooked if 140 through 150 appointments are taken.
b. Use data tables to study how revenue is affected by changes in the number of appointments accepted and patient demand.
c. Develop and analyze a simulation model with the following assumptions. Assume that the demand is uniform between 110 and 160 per week and that anywhere between 10% and 20% of prospective patients fail to show up or cancel their exam at the last minute. Determine the distribution of net profit (revenue less overbooking costs) and number overbooked for scheduling 133, 140, or 150 patients.