Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

PROBLEM 1. A CEO of a multihospital system is planning to expand operations into various states. It will take several years to get certificate of

image text in transcribed
PROBLEM 1. A CEO of a multihospital system is planning to expand operations into various states. It will take several years to get certificate of need (CON) approvals so that the new facilities can be constructed. The eventual cost (in million dollars) of building a facility will differ among states, depending upon finances, labor, and the economic and political climate. An outside consulting firm estimated the future costs for the new facilities as based on declining, similar, or improving national economies, and the associated probabilities as shown in the following table. Declining Same Improving State 0.25 0.40 0.35 Kentucky 22 19 15 Maryland 19 19 18 North Carolina 19 17 15 Tennessee 14 Virginia 21 13 a. Calculate the expected monetary cost for potential building in each state. If the CEO wants to plan expansion in two new states, which should he choose, and what is the expected total cost? b. The CEO is uneasy with the limited data, and wants to figure out how much the company should be willing to pay for additional information. Calculate the expected value of perfect information for this problem. (Hint: You must first calculate the expected monetary value (cost in this case) under perfect information - which two states would you build in if you know whether the national economy will decline, remain stable, or improve?) PROBLEM 2. Among your responsibilities at Kudley Memorial Hospital for Children is setting the staffing level in the patient transport unit. The personnel manager has said that you can have either three or four full-time positions. Each full-time person works eight hours per day. The number of patients that need to be transported each day allows the following distribution: Number of Patients Probability 13 0.2 20 0.5 25 0.3 The number of hours of transport time required per day is random and has a probability distribution that depends upon the number of patients as follows: Number of Hours Probability if Number of Patients is: per day 15 20 25 24 0.7 0.4 0.1 0.2 0.3 0.2 32 0.1 0.3 0.7

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Economic Development Of Latin America Since Independence

Authors: Luis Bértola, Luis Bértola

1st Edition

0191638242, 9780191638244

More Books

Students also viewed these Economics questions

Question

What skills does the CPA of the future need to be to be successful.

Answered: 1 week ago