1.

Given the capacity planning discussion in the test

what approach is being taken by Arnold planer Hospital
toward matching capacity to demand ?
A.Leading strategy
Management leads capacity in periodic increments.
Management could also add enough capacity in one
period to handle expected demand for multiple periods.

B. Lag strategy
Here management lags (chases) demand
C. Straddle Strategy
Here management uses average capacity increments to
straddle demand
Arnold planer Hospital take Straddle Strategy toward
matching capacity to demand ?

2. What kind of major changes could take place in Arnold

planer Hospital's demand forecast that would leave the
hospital with an underutilized facility ( namely , what are
the risks connected with the capacity decision ?
What kind of major changes could take place in Arnold
Palmer Hospital' demand forecast that would leave the
hospital with an underutilized facility (namely, what are the
risks connected with this capacity decision)?
Changing in capacity will have sales and cash flow
implications, it also have quality, supply chain, human
resource, and maintenance implications. All must be
considered to avoid any future failing or decreasing in
revenue, which would be occurred by poor decision.
To avoid any risk there are four special considerations for
good capacity decision
1. Forecast demand accurately, where a precision study must
be prepared before applying the new plan, which studies
specific issues such as
• Services that would transfer to the new facility
• Services that would remain in the existing facility
• Staffing needs
• Capital equipment
• Pro forma accounting data
• Regulatory requirements
These things if are considered that will lead to good decision.
2. Understanding the technology and capacity increment.
After determining the volume, technology decision may be
aided by analysis of cost, human resources required and
quality.
3. Find the optimum operation size, where technology and
capacity increments often dictate an optimal size for a facility.
4. Build for change. In our fast-paced world, change is
inevitable, so buildings and equipments should be designed
with modifications in mind to accommodate future changes.
As a conclusion, any changes in the following factors will
influence the demand
• Technology
• Competitors
• Building restrictions
• Cost of capital
• Human resource options
• Regulations

3. Use regression analysis to forecasts the point at which

Swanson needs to "build out " the top two floors of the
new building. namely, when demand will exceed 16,000
births .
=a+bx
=
= 9650.35

= a + b x X = 16000 births
= 0.001395 + 1988.03 x 16000
= 2010.36
The demand will exceed 16,000 births during 2010