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4.(15+5 pts) VVH wants to determine the optimal case mix for diagnosis-related groups(DRGs) that will maximize profits. Limited resources (e.g., space, qualified employees) are

4.(15+5 pts) VVH wants to determine the optimal case mix for diagnosis-related groups(DRGs) that will maximize profits. Limited resources (e.g., space, qualified employees) are available to serve patients classified in the various DRGs, and minimum levels of service (number of cases) must be achieved for each DRG. Resources Diagnostic services (hours) ICU bed days Routine bed days Nursing care (hours) Margin Minimum cases Respiratory 7 1 5 50 $400 15 Coronary Surgery 10 2.5 7 88 $2,500 10 DRGs Birth/Delivery 2 0.5 2 27 $300 20 Alcohol/Drug Abuse 1 (3) Answer below questions. Hint: use Excel Solver's sensitivity report. (a) How the total profit would be if VVH add one ICU bed day? 0 7 50 $50 10 Availability 325 55 420 3,800 (1) (Bonus 5 pts) Formulate linear optimization problem. Is non-negativity constraint required in this problem? (2) Use Excel's solver to find optimal cases for each DRG with Question 4.xlsx file. Use name manager function to define blocks contain constraints, decision variables and coefficients. (b) How the total profit would be if VVH decides to take one more Birth/Delivery case? (c) Currently, VVH earns $2,500 margin from Coronary Surgery. What is the maximum discount amount VVH can offer in Coronary Surgery? (4) Suppose VHH can make flexibilities in availability of Routine bed and Nursing care. VHH can set up range of [360, 480] in the availability of Routine bed and range of [3,300, 4,300] in the availability of Nursing care. Which DRG(s) could be affected by these two flexibilities? Hint: use SolverTable. 5.(20 pts) Glenn Foreman, president of Oceanview Development Corporation, is considering submitting a bid to purchase property that will be sold by sealed-bid auction at a county tax foreclosure. Glenn's initial judgment is to submit a bid of $5 million. Based on his experience, Glenn estimates that a bid of $5 million will have a 0.2 probability of being the highest bid and securing the property for Oceanview. The current date is June 1. Sealed bids for the property must be submitted by August 15. The winning bid will be announced on September 1

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