Case 1 The following table shows the quarterly demand of two products produced by ABC Inc. over the past 3 years. Quarter 1 2 3 4 5 6 7 8 9 10 11 12 Product 10 50 30 20 11 51 34 20 13 52 34 22 1 0 0 0 0 0 0 0 0 0 0 0 0 Product 80 60 90 55 79 50 82 55 70 53 84 51 2 0 0 0 0 0 0 0 0 0 0 0 0 Products 1 and 2 need two and three production hours per unit respectively. ABC is trying to forecast production hours needed for the next year (i.e. to forecast quarters 13,14,15,and 16). Split the historical data into a 2-year training set used to build some forecasting models (quarters 1-8) and a 1-year test set (quarters 9-12) to find out which forecasting method is better. a) (In Excel- Worksheet name P1-a). Forecasting Approach 1 (Individual forecasting and merging): Build a seasonality and regression model on the training data of each product individually, then forecast production hours needed for each product individually during the test year. Finally, combine the forecasts of both products and produce MAD of forecasting on the test year for production hours needed. b) (In Excel- Worksheet name P1-b). Forecasting Approach 2 (Data Pooling and Forecasting): Combine the data of both products. Build a single seasonality and regression model on the combined data of the training set, then forecast production hours needed for the test year. Finally, produce MAD of forecasting on the test year for production hours needed. c) (In Excel- Worksheet name P1-c) Which forecasting method is better on the basis of MAD? Intuitively, why do you think this method turned out to be better based on the nature of the forecasting approaches? Case 2 -The EGAD Bottling Company has recently expanded its bottles spring water operations to include several new flavors. Marketing manager Georgianna Mercer is predicting an upturn in demand based on the new offerings and the increased public awareness of the health benefits of drinking more water. She has prepared aggregate forecast for the next six months, as shown in the following table: Ma Ap Ma Jun Tot Month Ja Fe n b Foreca 10 60 st 0 C r y al 70 90 80 70 470 Other information been provided by the production manager as follow: Production cost Production capacity Subcontracting cost Holding cost Back-ordering cost Beginning inventory $10 per unit 80 units per month $18 per unit $2 per unit per month $5 per month per unit 0 units Develop 2 heuristic aggregate plans (in Excel) for EGAD and compare total costs: a. Chase Strategy. Do not use backordering! b. Use in-house production only. No subcontracting. Use Inventory and Backordering if necessary. Case 3: Memorial Hospital Memorial Hospital is a 265-bed regional health care facility located in the mountains of western North Carolina. The mission of the hospital is to provide quality health care to the people of Ashe County and the six surrounding counties. To accomplish this mission, Memorial Hospital's CEO has outlined three objectives: (1) maximize customer service to increase customer satisfaction, (2) minimize costs to remain competitive, and (3) minimize fluctuations in workforce levels to help stabilize area employment. The hospital's operations are segmented into eight major wards for the purposes of planning and scheduling the nursing staff. These wards are listed in the table below, along with the number of beds, targeted patient-to-nurse ratios, and average patient census for each ward. Ward Capacity Data Ward Number of Beds Target Patients Per Patient Census Nurse Intensive Care 20 2 10 Cardiac 25 4 15 Maternity 30 4 10 Pediatric 40 4 22 Surgery 5 -- -- Post-Op 15 Emergency 10 General 120 3 8 5 8 5 98 Table 1 The overall demand for hospital services remained relatively constant over the past few years even though the population of the seven counties served increased. This stable demand can be attributed to increased competition from other hospitals in the area and the rise in alternative health care delivery systems, such as health maintenance organizations (HMOs). However, demand for Memorial Hospital's services does vary considerably by type of ward and time of year. Table below provides a historical monthly breakdown of the average daily patient census per ward. Average Daily Patient Census Per Month J F M A M J J Ward Intensive Care A S N 13 10 8 7 7 6 11 13 9 10 1 12 Cardiac 18 16 15 13 14 12 13 12 3 15 18 D1420 D 1 Maternity 8 8 12 13 10 8 13 13 4 10 87 1 Pediatric 22 23 24 24 25 21 ང་ 22 1 Surgery 20 18 18 17 16 16 22 Post-Op Emergency 10 8 6 74 04 7 7 6 4 7 8 65 20 8 20 21 21 7 18 20 10 10 7 8 9 5 4 4 3 4 803 04 71922106 General 10 9 10 10 9 110 108 0 98 95 90 88 92 8 Table 2 2 7 4 04 The director of nursing for Memorial Hospital is Darlene Fry. Each fall she confronts one of the most challenging aspects of her job: planning the nurse-staffing levels for the next calendar year. Although the average demand for nurses has remained relatively stable over the past couple of years, the Table 2 (Ward Capacity Data) staffing plan usually changes because of changing work policies, changing pay structures, and temporary nurse availability and cost. With fall quickly approaching, Fry is collecting information to plan next year's staffing levels. The nurses at Memorial Hospital work a regular schedule of four 10-hour days per week. The average regular-time pay across all nursing grades is $12.00 per hour. Overtime may be scheduled when necessary. However, because of the intensity of the demands placed on nurses, only a limited amount of overtime is permitted per week. Nurses may be scheduled for as many as 12 hours per day, for a maximum of 5 days per week. Overtime is compensated at a rate of $18.00 per hour. In periods of extremely high demand, temporary part-time nurses may be hired for a limited period of time. Temporary nurses are paid $15.00 per hour. Memorial Hospital's policy limits the proportion of temporary nurses to 15 percent of the total nursing staff. Finding, hiring, and retaining qualified nurses is an ongoing problem for hospitals. One reason is that various forms of private practice lure many nurses away from hospitals with higher pay and greater flexibility. This situation has caused Memorial to guarantee its full -time staff nurses pay for a minimum of 30 hours per week, regardless of the demand placed on nursing services. In addition, each nurse receives 4 weeks of paid vacation each year. However, vacation scheduling may be somewhat restricted by the projected demand for nurses during particular times of the year. At present, the hospital employs 130 nurses, including 20 surgical nurses. The other 110 nurses are assigned to the remaining seven major areas of the hospital. The personnel department informed Fry that the average cost to the hospital for hiring a new full-time nurse is $400 and for laying off or firing a nurse is $150. Although layoffs are an option, Fry is aware of the hospital's objective of maintaining a level workforce. After looking over the information that she collected, Darlene Fry wants to consider staffing changes in all areas except the surgery ward, which is already correctly staffed. QUESTIONS 1. Explain the alternatives available to Darlene Fry as she develops a nurse staffing plan for Memorial Hospital. How does each alternative plan meet the objective stated by the CEO? 2. Based on the data presented, develop a nurse staffing plan in Excel for Memorial Hospital. Explain your rationale for this plan.