SUPPLY CHAIN QUESTIONS

Use the information above to answer the 5 questions below. THANK YOU!!

Leasing each new machine costs $1,000,000/year. The revenue per test is $400 (if done in time) and the variable costs are $300. If the test is delayed, you are not paid for the test. The fixed cost (rent for the office space, admin staff) that you currently incur for running your office is $40,000/month. You have space available for installing new equipment. You use a simple linear regression model to determine that the demand for the number of tests would increase to 4/hour within a month, and be stable after that. The lab will operate 24-7-365.

Assuming that there is no variability in the arrival process or the test process,

1. Would you buy any additional equipment? (3 points)
2. How many more machines will you buy? (3 points)
3. How much profit will you make from the new business venture? (3 points)

Suppose now that there is variability in the process. The Coefficient of Variation for the Arrivals and the Coefficient of Variation of the Testing Process are both 1.

4. Would you change the decision reached in the previous part? By how much?

5. How can you reduce the variability of the arrival process?

Paragraph Styles Editing Suppose you are the CEO and Chief of Medicine of the practice. A computer salesperson approaches you and informs you that by using their computer package, the productivity of the Physician Consult stage will increase, and the processing time will become 15 minutes/unit. (The computer interface will be more user friendly!!) The package will cost $5,000/month. Instead of sending patient samples to an external lab, you decide to analyze the samples in-house. A colleague, who is retiring, offers you the equipment they (singular they) had recently purchased, for free. They (singular they) also say that their lab had an arrival rate of 24 samples/day and the utilization was 0.60. Paragraph Styles Editing Suppose you are the CEO and Chief of Medicine of the practice. A computer salesperson approaches you and informs you that by using their computer package, the productivity of the Physician Consult stage will increase, and the processing time will become 15 minutes/unit. (The computer interface will be more user friendly!!) The package will cost $5,000/month. Instead of sending patient samples to an external lab, you decide to analyze the samples in-house. A colleague, who is retiring, offers you the equipment they (singular they) had recently purchased, for free. They (singular they) also say that their lab had an arrival rate of 24 samples/day and the utilization was 0.60