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Shouldice Hospital A Cut Above
Case Study 2
Prepared By
Steven Weidner
Gregory W. Judge
MC 550 Operational Management
City University
Renton, WA
October 15, 1996
Problem Definition
The problem is that Shouldice is facing a paradox of change. Shouldice is operating at its “best operating level” for a service company with limited flexibility in its plant, a specialized work force but are failing to meet all the demand for its chosen market niche. Adding additional capacity to meet the unmet market need may upset the existing work force and lower service quality. Failing to meet the market demand may invite competition that could eventually cause Shouldice to loss market share and end up with excess capacity.
Problem Justification
There is limited operating facts presented in the case so assumptions have made based on the information that was presented.
It is assumed that they are operating at the “best operating level” because the way the case describes how efficiently the hospital is ran and how the patients appear to be pleased with there treatment.
Capacity is nearly 100% full if they do 30 operations a day and the patients stay 3 days. This would fill up 90 beds for a 5 day work week. They also have 15% (14 hostel rooms) additional capacity for peak times. This also works out to be about 70% capacity of there full time potential of 7 days. 70% of maximum capacity is, according to Haywood-Farmer and Nollet the “best operating point”. To increase it rate of service utilization will decrease the service quality.
Because it is a service they can not ...