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Note that this case is paired with Accuride, which is scheduled for November 5th. You are to submit one or the other, but NOT both.

The Endoscopes at Victoria Hospital case was written in 1996; endoscopes were not as commonly used as they are today. Nonetheless, the issues raised in the case are directly relevant to our coverage in chapter 6--the quantitative and qualitative issues associated with decisions about production.

For the quantitative analysis, assume that Victoria Hospital [VH] has requested a differential analysis based on two different scenarios:

1. VH acts alone and sets up its own minor repair facility in-house.
2. VH cooperates with St. Joe's and University Hospital to establish a jointly-operated facility that would serve the minor scope repair needs of all three institutions.

Required:

1. For each alternative, determine the following:
   1. the annual savings on repairs
   2. the annual cash outflows required to operate the facility
   3. the investment required to establish the facility; note: parts inventory is an investment in this case, since they have to have the parts on hand to get the facility operating.
2. Recalculate requirement 1b, assuming that the that the facility is operated for VH only, and that the technician is paid only for the projected repair time. 
3. For each scenario, what is the payback period? How many years [or fractions thereof] will they have to wait to recoup their investment?
4. Consider the following potential solutions to the endoscope repair problem:
   1. Do nothing. Struggle along with the status quo.
   2. Work out a solution with Barton.
   3. Work with the out-of-province repair firm to help them improve their quality control procedures.
   4. Partner with St. Joseph's and University Hospital to set up a local repair service that would serve all the hospitals.
   5. Try to use Toronto's repair service.
   6. Find another supplier.
   7. Perform minor repairs in house.

        Briefly identify the issues associated with each alternative. Use bullet points.

Submission follows the pattern we have established: [1] via email no later than 7:45 am on November 3, 2009; email subject line is victoria; filename is yourlastnamevictoria.doc; AND [2] hard copy in class. NOTE: The quantitative analysis required for case this is not extensive. Do your work in Excel and the copy the Excel tables into MS Word. I do reserve the right two request to see your Excel file, however. 

Evaluation:

"A" papers: identification of relevant costs and benefits is complete and accurate. Evaluation of the issues associated with the alternative courses of action is complete, shows insight into the case situation, and an understanding of the context. "A" papers are professional in all respects.

"B" papers: most of the relevant costs and benefits are correctly identified. Evaluation of issues is thorough, but may lack some of the insight and perspective evident in the "A" papers. "B" papers have professional presentation. 

"C" papers: "C" papers exhibit more serious gaps in understanding the relevant cost and benefits of the courses of action. Calculations may be incorrect or items may be misclassified [e.g, investments are classified as annual operating costs, or vice versa]. Presentation may be less professional.

"D" and "E" papers exhibit progressively larger gaps in understanding of conceptual material. Organizational problems inhibit reader understanding. Professional presentation may be lacking.

Copyright © 2008 Gerald M. Myers
Last modified:09/05/2009 01:52:14 PM