Electronic Submission Coversheet Please complete and insert this form as the first page of your electronic submission. Submit the assignment with attached coversheet electronically through the Wolf E-submission gateway Please make sure you keep a copy of your assignment. Student Details Assignment Details Module name Operations Management Module Code 7IB002 Due date 09-01-2012 Assignment title Case study on a Hospital operations management All forms of plagiarism, cheating and unauthorized collusion are regarded seriously by the University and could result in penalties including failure in the unit and possible exclusion from the University. If you are in doubt, please read the following web page. Student’s DeclarationBy submitting this assignment I SIGNAL & DECLARE my knowledge and agreement to the following: -Except where I have indicated, the work I am submitting in this assignment is my own work and has not been submitted for assessment in another unit or for any other purpose. This work conforms to the instructions and submission guidelines as contained in the assessment briefing and the module guide respectively. This submission complies with University of Wolverhampton policies regarding plagiarism, cheating and collusion. I acknowledge and agree that the assessor of this assignment may, for the purpose of assessing this assignment: Reproduce this assignment and provide a copy to another academic staff member; and/or Communicate a copy of this assignment to a plagiarism-checking service. This web-based service will retain a copy of this work for subsequent plagiarism checking, but has a legal agreement with the University that it will not share or reproduce it in any form. I have retained a copy of this assignment for my own records. I will retain a copy of the notification of receipt of this assignment. 1
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Electronic Submission Coversheet
Please complete and insert this form as the first page of your electronic submission. Submit the assignment with attached coversheet electronically through the Wolf E-
submission gateway Please make sure you keep a copy of your assignment.Student Details
Assignment Details
Module nameOperations Management Module Code
7IB002
Due date 09-01-2012Assignment title Case study on a Hospital operations managementAll forms of plagiarism, cheating and unauthorized collusion are regarded seriously by the University and could result in penalties including failure in the unit and possible exclusion from the University. If you are in doubt, please read the following web page. Student’s DeclarationBy submitting this assignment I SIGNAL & DECLARE my knowledge and agreement to the following: -Except where I have indicated, the work I am submitting in this assignment is my own work and has not been submitted for assessment in another unit or for any other purpose. This work conforms to the instructions and submission guidelines as contained in the assessment briefing and the module guide respectively. This submission complies with University of Wolverhampton policies regarding plagiarism, cheating and collusion. I acknowledge and agree that the assessor of this assignment may, for the purpose of assessing this assignment:
Reproduce this assignment and provide a copy to another academic staff member; and/or
Communicate a copy of this assignment to a plagiarism-checking service. This web-based service will retain a copy of this work for subsequent plagiarism checking, but has a legal agreement with the University that it will not share or reproduce it in any form.
I have retained a copy of this assignment for my own records.
I will retain a copy of the notification of receipt of this assignment.
1
Authorised: Dean of School
Owner: Dean of School
Approved by: SQC
Revised:
Ref: UWBS038b Assessment Feedback
UWBS038b Assessment Feedback
Coursework Number or Reference
7IB002 Operations Management Subject Area Finance, Accounting and Business (FAB)
Student Name
Marking Moderation
Dr Gurmak Singh Provisional Grade: A
A B C D EFail
FFail
Application and evaluation of information management on operations functions.
X
Application and critical evaluation of management systems on operations functions.
X
Critical evaluation of the importance of project management to given business situations.
X
Critical evaluation of how the changes in role of business or the use of technology has impacted the function of the operations manager.
X
Excellent fluid writing style, virtually free from grammatical and spelling errors. Format wholly appropriate for task and audience.
X
Excellent range of reading – well beyond recommended reading list. All references complete, accurate and up-to-date.
X
A very good overview of the key operations management concepts for the case organization has been discussed. Each of the relevant operations management concepts have been discussed in good detail. You have supported these sections with relevant reference sources. These concepts have been applied to the case organization to analyse the problems. There is a clear link between theory and practice. You have used the operations management concepts discussed in the previous section and used these to analyse your case organization. Additionally your recommendations are drawn from possible areas for improvement within the case organization. The recommendations are closely linked to the operations management concepts. Key discussions, analysis and recommendations have been supported with relevant source material. There are discussions on the role of project management and management systems in relation to the case organization. There is a theoretical discussion on the role of operations manager. You have used a comprehensive and relevant source material. All the requirements of the assignment have been met, overall a very good assignment – well done.
Tutor’s signature: Dr Gurmak Singh Date:
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CONTENTS
PAGE NUMBERS
1. Introduction 3
2. Synopsis 3
3. Analysis and approaches to capacity planning 4 - 7
4. Lean management and its implications 8 - 10
5. Analysis of Inventory management 10 - 12
6. Quality management and its implications 13 - 15
7. Analysis of project management 15 - 17
8. Analysis of Information systems 18 - 21
9. Role of operations manager 21 - 22
10. Conclusion 22
11. Reference list 23 - 25
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1. INTRODUCTION
This report is on a 25 bedded small private medical hospital located at the Ongole town in India.
Each day nearly 80 patients visit the hospital’s out-patient ward from Monday to Saturday in
between 9am to 2pm and 6pm to 10pm. On Sundays the provision is only foremergency cases.
Along with round the clock emergency services it provides in-patient services and feminine care,
maternity care, surgical care,physiotherapy services, paediatric care and care for other minor
ailments.It has a small café.It also has a pharmacy, a laboratory, ECG and X-ray room, and a
USG scan room. The hospital turnover is $1.8 million/year. After analyzing all theoperations of
the hospital, management is showing keen interest to gain competitive advantage by improving
the quality of services, by reducing waste, and by cutting costs so they are analyzing lean
management, inventory management and quality management issues. To maximizethe capacity
of the hospital, management is focusing on thecapacity management issues.In this hospital each
department uses computers to record the patient information electronically, except at the
pharmacy and laboratory.
2. SYNOPSIS
This case analysis is on a hospital which is planning to increase the turnover by maximizing the
efficiency of the services. Sometimes patients are shifted to another location for post-operative
care due to the shortage of beds. In those situations, doctors and staff are moving here and there,
and allocating staff for different location became an additional cost to the management. Due to
that, management is considering the ways to improve the capacity of the hospital. Patients are
complaining about the longer waiting times at the pharmacy, laboratory, and scan rooms and
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sometimes patients are not getting the right amount of drugs as prescribed by the
doctors.Furthermore, supporting staff are complaining about the inadequacy of stock they needed
in time. So it is concentrating on lean management, inventory managementand quality
management issues.Traditionally people come to the hospital without appointments, and few
other hospitals are offering the same services in that area. Currently, the hospital is using
computers which were not networked, so information was not accessible to all departments
simultaneously. The hospital is seeking to upgrade IT services.
3. ANALYSIS AND APPROACHES TO CAPACITY PLANNING
Balancing the firm’s combined resources with that of demand for its products and services in a
timely manner is called as capacity planning and control, (Vonderembse and White, 2004).
Achieving the appropriate balance between capacity and demand can generate optimum profits
and the wrong balance can lead to wastage and missed opportunities or dissatisfied customers.
Capacity planning is largely a strategic function and capacity of a process might be increased or
decreased by building another facility or changing the process; the aim of capacity planning is to
match the available capacity to forecast demand over the long, medium and short periods,
(Waters, 1999; Heizer and Render, 2004; Bicheno and Elliott, 1997). Capacity might be
increased by tactical and operational decisions like renting extra space, or by working overtime
for a period etc. Usually the total workforce available at any time varies with demand.Such
demand can be met by changing the number of shifts; scheduling work patterns and so on,
(Waters, 1999; Hill, 2000).
To cope with the demand at peak times’ capacity adjustment can be done by, appointing
temporary labour or by adjusting the existing staff to workovertime. In addition, flexible capacity
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helps to change capacity within the limits of the plan or to alter the facility to reflect the needs of
both a business and its customers, (Hill, 2000; Heizer and Render, 2004). The main objective of
capacity planning is to match the level of operations to the level of the demand; and discussed
the cause of uncertainty of demand, it is due to uncertainty of number of orders to be received, or
uncertainty about the amount of resources required for the satisfaction of particular customer
orders. Butthe advantage is providing efficient adjustment or variation of system capacity
(including materials, machines, labour); usually system capacity can be changed with in certain
limit,(Samuel, 1999;Heizer and Render, 2004).
Knod (2001) also supported the above concepts and he further explained the capacity planning.
Capacity policies work best when they are in place before they are needed. And the emphasis is
on capacity allocation, (e.g., emergency medical treatments, services or equipment repairs, or
fast foods). He explained the types of demand and classified them according to their value and
usage, for instance ABC demand;it is a form of discriminating among many items of inventory
according to value. It helps in determining purchasing policies, Slack et al., (2008, 2009).
Capacity can be best maintained if the right amounts of resources are available at the right time
and right place. Thebest example for that is JIT (Just In Time) approach; the core principle of
this is to cut inventories between a pair of processes until the user process sometimes run out of
work (a stock out). The idea is to create bottle-neck, though not a severe or permanent one.
Slack et al., (2008, 2009) classified the demand into two types, one is dependent demand and
another is independent demand. In dependent demand, the demand for one product is related to
the demand for another product. In this most factors are well known and relatively predictable
and the process focuses on the consequences of demand. In independent demand, demand for
one product is not related to the demand for another product. In this demand from customers is
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not known and operations takes planning, & control and decision is based on based on past
experience. The response to customer demand can be achieved in following ways.Resource-to-
order: In this practice product or service produced only when the customer order confirmed.
Create/ make-to-order: Product or service partly produced prior to order, and only completed
when customer order confirmed. Make-to-stock: Product or service is produced and then
customers purchase them. To increase the efficiency of work, the amount of work allocated to
unit/individual is important. If work limit is allocated, and work over the limit is not accepted
that is called finite loading,and opposite is called as infinite loading. If loading was restricted it
results in loss of business, (Hill, 2000;Slack et al., 2009). Cachon and Terwiesch(2009) states
that, make-to-order can eliminate the entire mismatch cost associated with make-to-stock.The
main advantage of this is no left over inventory. And the main disadvantage is never able to
satisfy customer demands immediately.
Application of capacity planning to the Hospital case report
Currently the hospital is following finite loading concept to allocate the work limit to all the
ward nurses, ward boys and porters in in-patient ward;it is increasing efficiency of their work
and their observation on in-patients.In this hospital surgical equipment ready for future
operation, and dependent demand items are stocked prior to the time they will be needed in the
surgery process, (Make-to-stock). Though the hospital out-patient ward opening hours are 9am to
2pm and 6pm to 10pm, the patients coming to the hospital are not limited to the scheduled time.
If out-patient care is restricted to timings, it results in loss of business and competitors can take it
as advantage so hospital is followingthe Infinite loading.To get the laboratory services, patients
are paying the bill for the investigations at the cash counter and then the patient is redirected to
the laboratory through a series of processes, (Resource-to-order).Hospital is using create/ make-
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to-order policy; from hospital reception to housekeeping everything is ready before the patient
arrives the hospital. In this hospital, emergency rooms, surgical instruments, and other
accessories necessary for surgeries are sterilized frequently to give effective health care, (Make-
to-stock). Sometimes to meet varying requirements in line, staff switches from one department to
another, and they were usually trained to do so. When one doctor takes vacation, the other
doctors share that work. To manage with excess demand, management is hiring part-time and
temporary labour. Hospital capacity is not sufficient to meet the demand of patients.Due to that
patientsare waiting for the longer times or going elsewhere.Occasionally, the number of patients
was less and the number of staff was more, at those timesthe hospital is losing its marginal
profits. The hospital is using JIT approach for physiotherapy ward; when patient pays for that
service, the corresponding doctor was informed and he gives his services just in time. The
hospital is shifting patients to another location due to the inadequate number of beds. It is
allocating staff for them.
Recommendation: To cope with the demand, the management can pay for over-time to existing
staff, or they can arrange shift patterns instead of hiring part-time employees for a short time.The
regular patients were familiar with the existingstaff, hiring the existingstaff for overtime is
convenient than hiring the temporary staff. There will be no need of training for the existing
staff.Management can introduce appointment system for patients to avoid waiting times,
(Waters, 1999; Hill, 2000).Knod et al., (2001) states, for on demand sales and services, the
capacity plan aims at providing the right amount of space, equipment, labor, and inventory to do
business. And the recommendation is to capacity allocation (e.g. emergency medical treatments,
services or equipment repairs),efficient allocation of resources in the hospital improves hospital
efficiency.Hill, (2000) suggested that, the capacity indicator of a hospital is its beds. They can
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increase the hospital capacity (in relation to beds, doctors, nurses, and support staff required at
different times) to meet the demand of the patients,that will lead tocompetitive advantage.
4. LEAN MANAGEMENT AND ITS IMPLICATIONS
The principle of lean operations is the elimination of all waste in order to develop an operation
faster, more dependable to produce higher quality products and services and above all operating
at low cost, (Slack et al., 2004). Lean is anything that does not add value to the external
customer, lean operations are strongly associated with both waste elimination and continuous
improvement, (Bicheno and Elliott, 1997); elimination of non-value added activities, (Cachon
and Terwiesch, 2009).Lean operations in turn underpin the techniques of Just In Time (JIT): the
elimination of waste, the involvement of staff in the operation, and the drive for continuous
improvement, (Slack et al., 2004); some lean techniques are not specific to lean operations or to
JIT, they are associated with demand management, total maintenance and total quality, (Bicheno
and Elliott, 1997). Advantages of lean management are: It identifies waste, eliminates waste, and
involves every employee and continuous improvement in operations. Elimination of waste can
be achieved by reducing overproduction of goods/services, by decreasing waiting times, by
reducing unnecessary transport and by correcting unnecessary motion etc.Lean reduces costs,
improves quality and efficiency of work. Disadvantages of lean management are: It can be
achieved only through involvement of all the staff and their response to changes might be
different from individual to individual,(Slack et al., 2004).
Application of lean management to the Hospital
Presently, the hospital is using some lean management principles. For example, the
hospitalnurses were needed to wash their hands frequently for a variety of reasons.So the
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administration advised them, to wear disposable gloves and to use antiseptic sprays to reduce
unnecessary movement of nurses and to save time. Therefore, they can move to another patient
more quickly.Particularly, people waiting at USG scan rooms was horrible because most of the
patients were asked to drink large amounts of water for getting scanned.There the patient
transport process was one of the most delay factors.That processis taking longer time and
patients are asking for quicker response.At the pharmacy, on one hand customers are waiting
longer times and sometimes not getting the right amount of medicines. On the other hand, the
pharmacy is not selling some medicines until expiry date.It is leading to waste of money and
medicines. The bed allocation in the hospital is usually to urgent priority; in in-patient wards
patients are placing by clinical similarity to avoid unnecessary movement of doctors. Frequently,
nurses are not having right information about the patient discharge when patient was readied for
discharge. They are waiting for the signature of the discharge coordinator. Already due to the
inadequate number of beds, some services shifted to another location. Consequently, patients
who need to be admitted into the hospital are waiting. Furthermore, doctors are waiting for the
patient clinical information from other departments.
Recommendation
Lean management recommends flow improvement (Bicheno and Holweg, 2009), where each
patient is worked with one unit at a time, and passed on to the next step of the process without
any delay. And standardizing the process in line with demand, not before and not after demand,
training the staff, team work, and improving communication measures between units help to
avoid unnecessarywaiting times, (Bicheno and Holweg,2009).These recommendations help in
avoiding queues at the scan room and pharmacy as well.Lean allows continuous improvement
and improves quality, (Cachon and Terwiesch, 2009; Bicheno and Holweg, 2009). Unnecessary
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moving of materials does not add value; changing and bringing the processes together can help
to improve the process and to reduce waste, (Slack et al., 2004; Bicheno and Elliott, 1997;
Bicheno and Holweg, 2009; Cachon and Terwiesch, 2009). These lean principles recommend the
hospital, to coordinate all the activities of doctors, nurses and administration. So that nurses can
discharge the patient exactly when the patient needed, without waiting for the
information/process/signature of corresponding people,and it can resolve the bed occupancy
problem as well.In the pharmacy, they can place the newest deliveries of drugs at the back of the
queue, so that they can sell old medicines first.These small operational changes with the existing
resources will avoid the wastage of medicines.
5. ANALYSIS OF INVENTORY MANAGEMENT
Inventory management concerns the management and control of the materials that to go into the
products and services at different points in the conversion process, (Hill, 2000). In many
instances the inventory is used to buffer against uncertainty, and furthermore it can hide
problems, (Mangan et al., 2008). Inventory can also help a company to respond to customers
more quickly, to meet expected demand and to take advantage of quantity discounts etc.,
(Vonderembse and White, 2004). Inventory items can be classified as ABC items based on
Pareto principle. It represents the highest value items as ‘A’ class, medium value items as ‘B’
class, and lowest value items as ‘C’ class which requires little management, (Bicheno and Elliott,
1997; Lambert et al., 1998). ABC analysis helps in reducing the inventory levels and costs,
(Slack et al., 2004). The main disadvantage of this system is the, value was given to high usage,
not to the high importance of items, (Heizer and Render, 2004). Bisen et al., (2009) explained
VED analysis: E for essential items, D for less essential items and V for large stock of inventory
items.
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Inventory is related to the relative rates of demand and supply. In order to maintain the inventory
the principles of dependent demand and independent demand are also useful, (Hill, 2000).
“Inventory control models assume that the demand for an item is either independent of or
dependent on the demand for other items”, (Heizer and Render, 2004). Inventory can be