Your hospital purchased its first cat scan machine on 1/1/2015 for $2,400,000. During 2015, your cat scan machine was available to perform scans during the hours of 8:00 am - 5:00 pm with a ½ lunch break and two other 15-minute breaks during the day (i.e., the machine works 8 hours or 480 minutes per day. The cat scan department is open 5 days per week including holidays, 52 weeks per year, or a total of 2,080 hours.

A trained technician is required to operate a cat scan machine. You have one technician whose salary was $40,000 per year including benefits. The cat scan machine is in a building that cost $1,500,000 to build and was built specifically for the cat scan machine (although it has room for more machines). The costs of operating the building (utilities, insurance, taxes, etc.), aside from electricity to run the machines, was $34,000 last year. There are no other employees required to operate the machine as scheduling is done by the hospital’s scheduling department and maintenance by the hospital’s maintenance department. The sterile paper sheet that covers the bed of the machine costs $3.00 and must be changed after each scan. The hospital maintains a stock of 200 paper sheets at all times.

You perform two types of scans – brain scans and bone scans. The insurance companies pay you $500 for a brain scan and $300 for a bone scan. Both scans require 15 minutes of machine time, so you can do 4 of either type of scan per hour. Electricity to run the machine costs $10.00 per scan for either type.

Your hospital performed 8,000 cat scans is the year 2015 – 4,000 of each type. Demand for cat scans is somewhat seasonal as more people break bones, etc. in the summer than in the winter. Your hospital depreciates equipment and buildings over 10 years.

Answer the following.

a. What is the throughput for a brain cat scan? What is the throughput for a bone cat scan? What was total throughput for your cat scan machine for the year 2015?

b. What is the hospital’s total inventory at 12/31/2015, using Goldratt’s definition, related to the cat scan department?

c. What is the hospital’s total inventory at 12/31/2015, using the traditional accounting definition, related to the cat scan department?

d. What is the total OE of the cat scan department for the year 2015?

e. What was the net profit of the cat scan operation for the year 2015?

f. Was the cat scan machine a constraint in the year 2015? Explain your answer