Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
OM5 C7 IM
14. The Wilcox Student Health Center has just implemented a new computer system and
service process to “improve efficiency.” The process flowchart and analysis
framework is also provided. As pharmacy manager, you are concerned about waiting
time and its potential impact on college students who “get no respect.” All
prescriptions (Rxs) go through the following process:
Assume that students arrive to drop-off Rxs at a steady rate of two Rxs per
The fill Rx station typically has 40 Rxs in process and waiting on average. Because of
this perceived long wait, 95 percent of the students decide to come back later for
People and information flow with the assumption of 1 Rx per
student.
Demand (arrival) or throughput rate = 2 Rxs/minute
This is not an easy problem but it illustrates you must
a. What is the average time a student spends in the pharmacy if
they stay to pick-up their Rx? You may want to use the worksheet
below.
1
OM5 C7 IM
b. How many minutes does the student spend in the pharmacy if he or
she picks-up the Rx 3 hours later (i.e., the student goes home after
dropping the Rx o1)?
c. What is the average time in minutes that all students spend in the
pharmacy?
d. What is the average time in minutes that the Rx spends in the
process? Count time from entering the drop-o1 line to completing
payment.
15. A manufacturer of air conditioner compressors is concerned that too much money is
tied up in its value chain. Average raw material inventory is $50 million and
work-in-process (WIP) production inventory is $20 million. Sales are $20 million per
week and finished goods inventory averages $30 million. The average outstanding
accounts receivable is $60 million. Assume 50 weeks in one year. The value chain is
shown below:
2
OM5 C7 IM
a. What is the total flow (process) time of a throughput dollar?
(Hint: Use a WIP = R*T format and table as shown in Problem #
14 to organize your solution.)
First, review the calculations below. If we add the flow times for each process
b. What is the average dollar inventory in the value chain?
c. Which of the major stages—raw materials, WIP, .nished goods or
accounts receivable—is the best candidate for freeing up dollars for
the air conditioner manufacturer?
Clearly, accounts receivable ties up $60m in cash and takes on
d. What is the target level of average accounts receivable inventory
3
OM5 C7 IM
if management can reduce the time a dollar spends in accounts
receivable inventory (processing and collections) by one-half by
improving the accounts receivable process?
WIP = R*T or $1,000m/year*.03 year = $30m instead of $60m. This
e. What else does this flow time analysis problem demonstrate?
This post-production service is a good place to start improving value
chain performance. Revisit Exhibit 2.3 to see what other
Case Teaching Note: Hopewell Hospital Pharmacy
Overview
Hopewell Hospital is trying to reduce costs yet maintain high quality.
There are many opportunities for errors in writing and .lling an Rx in a
hospital pharmacy and this case focuses, in part on that issue. The
case cites national studies on hospital pharmacies found error rates
ranging from .01 percent (1 in a 1,000) to 15 percent (15 in 100).
The focus of the case is on job and process design and "how to
organize and group work?" Instructors might want to assign other
(extra) questions to focus student attention or at least pose during
class (see teaching plan).
Case Questions and Brief Answers
1. Draw the process flowchart including processing times and
capacities per step, and total time per prescription.
Since process steps (stages) are in series this is a relatively easy
3. Clearly identify two other ways to group and divide the work among
the medical technicians and pharmacists, compute labor utilizations,
and discuss the advantages and disadvantages of each job and
process design option.
The case questions are general so expect a wide variety of student
(1) Process Design Option A -- All work (steps 1 to 7) done by
pharmacists.
Disadvantages - no bene.t from job specialization, highest skill level
The spreadsheet analysis indicates with 4 pharmacist utilization is
Also, note that if you group all work and one pharmacist .lls a RX
(2) Process Design Option B -- Assign steps 1 and 7 to medical
technicians and steps 2 to 6 to pharmacists.
Advantages - lessen workload on pharmacists labor pool, all that is
legally required
5
OM5 C7 IM
With Option B utilization is 96.2% with 4 pharmacists and 92.3% with
5. Notice that the service rate went from 6.19 Rx/hour to 7.8 Rx/hour
assuming this option.
(3) Process Design Option C -- Assign steps 1 and 7 to medical
Disadvantages - since the two pharmacists workstation are now
interdependent must be sta1ed at all times, not sure about impact
4. What are your .nal recommendations?
Option A with 5 pharmacists and a utilization of 97% is best in
Option B is probably second best with 4 pharmacist's utilization
Pharmacy must comply with all legal requirements.
conflicts and allergies.
Other case questions you might use during class discussion or
assign prior to case write-up are as follows.
1. What is range of service upsets severity in this case
situation?
6
Degree of Service Upset Severity
OM5 C7 IM
2. What is
the #1 competitive priority for this hospital pharmacy process?
• Quality is #1 -- zero errors, minimize opportunities for errors,
3. Would you rather have one pharmacist handle your
prescription from A to Z or can these tasks be assigned to
different pharmacists?
For goods-producing assembly lines job specialization has many
4. Does this process have to be organized in series?
5. How can software technology help ensure quality? (Pharmacy
6. What sustainability issues are there in a hospital pharmacy?
Teaching Plan
You can use the four case questions and the .ve extra questions to
create a good case discussion depending on how much time you
You can conclude this case discussion by pointing out that
• How you group (organize) work affect resource utilization, waiting
7
Low
High
No effect Upset Stomach Sick Shock Death
OM5 C7 IM
8
OM5 C7 IM
9
OM5 C7 IM
Hopewell Hospital Pharmacy Total
Step
1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7
Time
per
Rx
min/Rx 0.5 1.3 1.4 1.0 3.2 0.8 1.5 9.70
Capacit
y 120.0 46.2 42.9 60.0 18.8 75.0 40.0
6.19
(60/9.7)
(Rx/Hour) BN
JOB & PROCESS DESIGN -- OPTION A
If you assume all work can be grouped together than one pharmacist has a capacity of 6.2 Rxs/hour
JOB & PROCESS DESIGN -- OPTION B
If 4 pharmacist do all the work except Steps 1 & 7 (assigned to medical technicians) then it takes 7.7 minutes/Rx
or 6.1 Rxs/hour. The revised pharmacist utilization 96.2%. If 5 pharmacist are assigned under these job and
JOB & PROCESS DESIGN -- OTHER
If we assume the medical technicians can do Steps 1 and 7 and Steps 2 to 6 can be combined then we have
Using Equation 7.2
If 4 pharmacist do all
the If 5 pharmacist do all the If 4 pharmacist do all the If 5 pharmacist do all the
work then: work then: work except Steps 1 & 7 work except Steps 1 & 7
10
OM5 C7 IM
11
