Business School

School of Economics
Assignment Part A cover sheet
Quantitative Methods for Business
COMM5005, SEMESTER 2, 2016
Please complete the first two areas of this form and include in each submitted assignment. Submit each assignment
according to the instructions provided in Moodle.
Student ID Number: z5124380
Student Name: Gandra Braino Eltino
Student ID Number: z5099337

Student Name: Jiaxing He

Student ID Number: z5133700

Student Name: Jiapeng Liu

Declaration
I declare that this assessment item is my own work, except where acknowledged, and has not been submitted for academic
credit elsewhere, and acknowledge that the assessor of this item may, for the purpose of assessing this item:

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Assignment Topic:

Research Plan for locating the new Health 4U medical centre

Date Due: 2nd September 2016

Date Submitted: 2nd September 2016

Page Count ( excluding cover page): 5

Group Code: V

Criterion

Max

Explaining
Rationale
and Criteria
to be used

Explaining
sources to be
used and
why

Finding
relevant
information
about LGAs

Details of
ABS and
other data to
be used with
reasons for
use

Data analysis
methods

Total

Assignment cover sheet

Mark

0.25

0.5

0.75

0.75

No
effort
made

Explanation or
criteria are very
inadequate

0.75

No effort
made

Explanation or
sources are
very inadequate

A reasonable
effort but
needs further
development
A reasonable
effort but needs
further
development

Clear
explanation but
criteria need
improvement
Clear
explanation but
needs further
sources

Very clearly
explained.
Criteria are
appropriate .
Very clearly
explained.
Sources are
appropriate.

0.50

No effort
made

Very inadequate
effort to find
information
about LGAs

A reasonable
effort but needs
further
development

Good effort but

more LGA
information is
needed

Very good effort.

LGA information
is appropriate.

0.50

No effort
made

Very inadequate
details about
data

A reasonable
effort but needs
further
development

Good effort but

more data
should be
considered

Very good effort

to identify a wide
range of relevant
data.

1.0

No effort
to show
how data
will be
analysed

Very inadequate
detail about
data analysis
methods

A reasonable
amount of detail
but methods
need to be
modified

Good effort but

methods need
modifying

Very good effort

to show
appropriate data
analysis methods

3.50

COMM5005 Semester 2 2016

Rationale of for the criteria

The motivation of the private medical center would be profit maximization on the basis of
substantial market coverage, of which pediatrics and geriatrics would serve relatively
heavier weight of the patients. This implies that desirability of the location for the hospital
is required to be primarily based on sufficient coverage of patients and then, followed by
consideration of maximization in profit, which is mainly contributed by children and the
senior who might receive medically related service.
The bill is assumed to be self-paid, which means that there would be no consideration in
terms of bulk billing, therefore, income level would be counted as main indicator of
patients affordability. Additionally, the property of the medical care center would be
private, denoting that consideration of government support could be minimized. Assumed
that this private hospital establishment is motivated by profit maximization that mainly
contributed by substantial service coverage, three main criteria would be listed, which
include market potential, workforce availability and competitive intensity.
Market potential would be primarily measured by population and income level in each
Local Government Area. Plus, growth rate of population would be utilized as indicators of
sustainability of market potential. Population would be divided on three age brackets,
which is made up with children at the age between 0 to 16, the senior who are above 65,
and the adult who are between 17 to 64, according to the earliest age of law obligation
and pension eligibility defined by Australian Government. Additionally, affordability would
be measured by income status with the level of low, middle and high.
Availability of workforce could be presented by the number of medical staff within the
local government area in order to assume the degree of which medical center would be
well-equipped in response to the demand.
Total score which is summed up with the number of individual as unit in terms of
population, income level, number of staff with the consideration of different weight would
be regarded as the assessment of overall attractiveness in terms of market potential and
capability of supply. In addition, growth rate of population from 2006 to 2011 would be
calculated as the predictor of market potential in the future.
Furthermore, number of competitors, namely, the medical center that provide similar
medical service offering in response to same target market would be identified to
understand intensity of competitiveness.
1. Rationale and criteria
Income
What assumptions are you making about the medical centres profit motive?
2

Are you aiming for quality or quantity of consultations?

Are you mainly targeting clients who will be bulk-billed or not bulk-billed?
Are you targeting areas where residents have high or low incomes? Why?
Social factors
How much are you considering the needs of the community and social responsibility?
Are you mainly targeting clients who are elderly / from younger age groups/ or any age group?
Are there a large proportion of potential clients in the area who do not speak English and how
will the practice handle this?
Location
How will features of the locations impact on your decision?
Is there an adequate supply of staff in each area?
How much competition is there from existing medical practices/hospitals with emergency
centres?
How expensive are commercial rents or suitable properties for sale in the area?
Would it be difficult to find suitable premises?
What is the population density of LGAs?
How spread out are the LGAs populations?

Sources of Information and Reasons

Information which is used for support decision making is primarily obtained in Table
Builder Basic of Australian Bureau of Statistics due to its authority and comprehensiveness
in census information. However, additional data source such as NSW government health is
required to complement deficiency of Table Builder Basic in search for the area, which is
used for calculating the number of hospital within certain local government area as
assessing degree of rivalry.
General information about LGA
Liverpool, Auburn, Canterbury, Hurstville, Lake Macquarie, Wavelery, Marrickville, Mosman
and Orange would be considered as candidates of local government area in this best
location analysis.
Generally, population in all local government areas was undergoing an increase from 2006
to 2011, of which Liverpool showed the most significant escalation in its population,
followed by Auburn, Canterbury, Lake Macquarie, Hurstville, Marrickville. Relatively limited
enhancement in population could be observed in Wavelery, Orange and Mosman,
indicating comparatively limited market potential in start-up of the hospital in comparison
with those with noticeable population growth.
Gap of income level between majority of the population and those medically related staff
is low in Marrickville, Mosman and Wavelery; relatively acceptable in Hurstville, Lake
Macquari, and Orange; massive in Auburn, Canterbury, and Livepool, which demonstrates
possibility in generating profit with the consideration of affordability to cover the cost of
3

staffs. In other words, residents in Marrickville, Mosman and Wavelery who have higher
income are equipped with sufficient affordability for the health care costs. However, in
Auburn, Canterbury, and Livepool, the local people's income level might hardly affordable
for the expensive medical cost due to the relative high level in salaries of staffs in
hospital.
1. It would be desirable to look at the relevant local Government websites to find information about
each area.
Are you considering population density? If so you need to find the area of each LGA.
An LGA is usually composed of several suburbs. Sometimes one of them they has the same
name as the LGA.
If data is only available by suburb you might need to consolidate it to find the data for the whole
LGA.
Methodology
The methodology we used in this analysis is weighted criteria scoring method. This
method basically provides an assessment of available options, in this case the Local
Government Areas (LGAs) which are suitable for new hospital, based on several criteria.
Each of these criteria then weighted according to the degree of influence, with total
weight of 1 or 100%. All weighted criteria are summed as total score. LGA with the highest
total score will become the best candidate for the new health center.

Total Score=0.12 + 0.06 + 0.12 +0.06 +0.1 +0.14 +0.4

Where,

: number of childrenthat LGA (014 years)

:number of adult that LGA (1564 years)

: number of senior that LGA ( Above 65)

:number of people with low income level (AUD 1399 per week )
: number of people with middle income level ( AUD 4001,249 per week )
:number of people with high income level ( AUD 1,250more than 2000 per week)

:number of worker with health care backgroundthat LGA

There are three criteria used in the calculation, such as age, income level, and the
potential supply of workers in the area. Ages are categorized into three different groups
based on the definition of Australian government. The weights are based on the
assumption that children and seniors are more vulnerable to disease so that the possibility
of getting hospital treatment are higher compared to those in the productive age.
Whereas for income, we divide it into three categories which exclude negative and nil
income. We argue that the higher income level, the higher the score. Based on the
Australian Bureau of Statistics, high income category includes those in highest income
quintile, whereas middle income group is those in the third income quintile and low
income is those in the lowest income quintile. The availability of healthcare background
workforce is also important aspect that need to be taken into account.
Moreover, the growth of the potential market would be considered. Not only paying
attention to the total score, the growth of each location by comparing the data of 2011
with 2006 would be also observed. The final choice is determined by the highest total
score, highest growth and relatively low competitive intensity.
Demonstration of Calculation
Supposed there some potential areas for the new medical center, with demographic data
of:

Market Potential (60%)

Local Government
Areas

Weight
A
B
C
D
E
F
G
H
I

Population (30%)
child
12%
2000
4400
5500
2200
422
5555
2100
3200
2000

adult
6%
3000
500
555
2000
3000
4000
5000
110
200

Income Level (30%)

senior
12%
2330
200
400
5000
300
400
5500
700
600

low
6%
300
400
500
600
2222
3301
3500
5400
2000

middle
10%
2000
4440
5500
5000
1100
3000
4000
4000
2000

high
14%
3000
200
3000
4000
5000
5000
6000
4000
4300

Workforce
Availability
(40%)
Number of
healthcare
worker
40%
2010
2000
3000
4000
5000
3400
5400
2060
764

From the table we can generate the total score of each area, with calculation as follow:
Market Potential (60%)
Local Government
Areas
Weight
A
B
C
D
E
F
G
H
I

Population (30%)
child
12%
240
528
660
264
51
667
252
384
240

adult
6%
180
30
33
120
180
240
300
7
12

senior
12%
280
24
48
600
36
48
660
84
72

Income Level (30%)

low
6%
18
24
30
36
133
198
210
324
120

middle
10%
200
444
550
500
110
300
400
400
200

Workforce
Availability (40%)
number of
healthcare worker

Total
Score
Total
Score

40%
804
800
1200
1600
2000
1360
2160
824
306

100%
2142
1878
2941
3680
3210
3513
4822
2583
1552

high
14%
420
28
420
560
700
700
840
560
602

The calculation shows us that the Area G is the best location for setting up the new
hospital, followed by Area D and F in the second and third place with the consideration of
market attractiveness and capability in medical service in current stage. However, as is
shown below, Area F would be deemed to be most attractive in terms of potential in market
growth in long term.

LGA
A
B
C
D
E
F
G
H
I

Population
2011
2006
7330
7030
5100
4660
6455
6250
9200
8600
3722
3900
9955
8580
12600
14100
4010
3850
2800
3150

Growth Rate
4.3%
9.4%
3.3%
7.0%
-4.6%
16.0%
-10.6%
4.2%
-11.1%

1. It would be desirable to look at the relevant local Government websites to find information about
each area.
Are you considering population density? If so you need to find the area of each LGA.
An LGA is usually composed of several suburbs. Sometimes one of them they has the same
name as the LGA.
If data is only available by suburb you might need to consolidate it to find the data for the whole
LGA.
What relationship is there between ages of residents and the medical centre?
What relationship is there between language spoken and the medical centre?

Furthermore, in terms of competitiveness, rivalry of Area G is the highest, followed by

Area E, B and F, as can be seen in the bar chart below:

Number of Competitors
8
7
6
5
4
3
2
1
0

To sum up, by combining the total score from the calculation above and the growth
aspect, we get area F is the most suitable area to build a new health center. This analysis
use data acquired from ABS Table Builder Basic of Australian Bureau of Statistics, which
could be considered as numerical data in the unit of number of population. Based on the
assumption, the judgment of desirability in location would be primarily assessed by total
sum of attractiveness in market and the potential of demand coverage with the unit in the
number of individuals, accompanied with the reference in growth rate and degree of
rivalry.
Have you found the number of generalist medical practitioners or included others as
well? Why?
Do they live or work in the LGA?
2. You need to calculate some descriptive statistics for your report.
Excel descriptive statistics command cannot be used with group data.
Excel commands such as Average only calculate the average of frequencies. They do not
take account of the group data classes.
How are you going to estimate the midpoint of open-ended classes?
Check the method used for calculating the variance/standard deviation. There are
different formulas for individual and group data.
Check the method used for calculating the mean.
Is this the best type of graph for this data?
Pie charts are useful to compare proportions when there a small number of categories.
They do not show overall size of two or more entities.
Clients or patients
Make sure you consider commercial property casts or adjust residential ones
How is this related to medical centres?
Be cautious of the automatic scales used in ABS graphs and whether all bars can be seen

Consider some additional types of graphs

Not always a reliable source
Learn about the LGAs. They are suburban locations or large country towns.

What assumptions are you making here? Can people for other LGAs visit the medical centre or not?