Since opening day, Arnold Palmer Hospital has experienced an explosive growth in demand for its services. One of only six hospitals in the U.S. to specialize in health care for women and children. Arnold Palmer Hospital has cared for more than 1.500.000 patients who came to the Orlando facility from all 50 states and more than 100 other countries. With patient satisfaction scores in the top 10% of U.S. hospitals surveyed (over 95% of patients would recommend the hospital to others), one of Arnold Palmer Hospital's main focuses is delivery of babies. Originally built with 281 beds and a capacity for 6.500 births per year, the hospital steadily approached and then passed 10.000 births. Looking at a table on the births below. Executive Director Kathy Swanson knew an expansion was necessary. With continuing population growth in its market area serving 18 central Florida counties, Arnold Palmer Hospital was delivering the equivalent of a kindergarten class of babies every day and still not meeting demand. Supported with substantial additional demographic analysis, the hospital was ready to move ahead with a capacity expansion plan and a new 11-story hospital building across the street from the existing facility. Thirty-five planning teams were established to study such issues as (1) specific forecasts, (2) services that would transfer to the new facility, (3) services that would remain in the existing facility, (4) staffing needs, (5) capital equipment, (6) pro forma accounting data, and (7) regulator)' requirements. Ultimately. Arnold Palmer Hospital was ready to move ahead with a budget of $100 million and a commitment to an additional 150 beds. But given the growth of the central Florida region, Swanson decided to expand the hospital in stages: the top two floors would be empty interiors (“shell") to be completed at a later date, and the fourth-floor operating room could be doubled in size when needed. “With the new facility in place, we are now able to handle up to 16,000 births per year,” says Swanson

Questions 1. Given the capacity planning discussion in the text (see Figure 4.4 on Page 104). what approach is being taken by Arnold Palmer Hospital toward matching capacity to demand? 2. What kind of major changes could take place in Arnold Palmer Hospital's demand forecast that would leave the hospital with an underutilized facility (namely, what are the risks connected with this capacity decision)?

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YEAR BIRTHS 2000 8,655 2001 9,536 2002 9,825 2003 10,253 2004 10,555 2005 12,316 2006 13,070 2007 14,028 2008 14,241 2009 13,050 2010 12,571 2011 12,978 2012 13,529 2013 13,576 2014 13,994 2015 14,898 2016 14,600 2017 14,111