Question
A community health center is currently operating from 7:00 a.m. to 11:00 p.m., Monday through Friday. The manager has constructed five decision packages. The first
A community health center is currently operating from 7:00 a.m. to 11:00 p.m., Monday through Friday. The manager has constructed five decision packages. The first calls for closure; the second, the minimum level, reduces hours to 8:00 a.m. through 5:00 p.m. (40 hours per week); the reduced level operates from 7:00 a.m. to 7:00 p.m. (60 hours); the current level maintains the current 80 hours per week; and the enhanced level adds 8 hours on Saturday (88 hours). The clinic receives $92 per patient seen. The following table shows the managers estimates of patients seen under each set of operating hours. Calculate the marginal cost, total and marginal revenues, and the costbenefit ratio (marginal benefit/marginal cost). What is your recommendation for operating hours? Should hours be increased or reduced from current hours?
Decision Package | Patients | Total Cost | Marginal Cost | Total Revenue | Marginal Revenue | CostBenefit Ratio |
Eliminate (0 of 4) | 0 | $0 | _______ | _______ | _______ | _______ |
Minimum (1 of 4) | 120 | $8,000 | _______ | _______ | _______ | _______ |
Reduced (2 of 4) | 144 | $12,400 | _______ | _______ | _______ | _______ |
Current (3 of 4) | 184 | $16,800 | _______ | _______ | _______ | _______ |
Enhanced (4 of 4) | 208 | $19,200 | _______ | _______ | _______ | _______ |
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