Reference no: EM132568795

France-Belgium is proud of its 6-week train driver training program that it conducts for all its drivers. A 6-week training program costs the company $ 22000 for instructors, equipment and so on and is independent of the number of new drivers in the class as long as the class size remains less than or equal to 35. The training program must provide the company with five new fully trained drivers per month. After completing the training program, new drivers are paid $1600 per month but do not work until a full-time position is open. The company views the $1600 as holding cost necessary to maintain a supply of newly trained drivers available for immediate service.

Question 1: Viewing new drivers as inventory -type units, how large should the training classes be in order to minimize the total annual training and new driver idle-time costs? How many training classes should the company hold each year? What is the total annual cost of your recommendation?