A community hospital is planning to expand its services to three new service lines in the medical diagnostic categories (MDCs) and their corresponding diagnostic related groupings (DRGs) shown in Table 10.5 .1
Five common resources must be allocated among these three new service lines according to which will bring the most revenue (using overall average DRG payments in a given MDC category). The resources are beds (measured as patient days), nursing staff, radiology, laboratory, and operating room (hint: constraints). The health care manager in charge of this expansion project obtained the average consumption patterns of these resources for each MDC from
other peer institutions, and estimated the resources that can be made available (per year) for the new service lines in Table EX 10.5 .2:
Average revenues from MDC - 2, MDC - 19, and MDC - 21 are $ 8,885, $ 10,143, and $ 12,711, respectively.
a. Formulate this as a linear programming problem.
b. Solve the problem using Excel solver.
c. To get the most revenue, which service(s) should be offered?
d. What is the optimal volume(s)?
e. What is the total expected revenue from the new services?
f. Which resources should be expanded?
g. How much additional revenue can be expected if resources are selected in part (f) for expansion without violating the current solution?