What is amtrak ordering cost-annual demand for new drivers

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Reference no: EM131517140

Amtrak Bus Lines is proud of its six-week bus driver training program that it conducts for all new Amtrak drivers. As long as the class size remains less than or equal to 35, a six-week training program costs Amtrak $22,000 for instructors and equipment.

The Amtrak training program must provide the company with approximately five new drivers per month. After completing the training program, new drivers are paid $1,600 per month but do not work until a full time driver position is available.

Amtrak views the $1,600 per month paid to each idle new driver as a holding cost necessary to maintain a supply of newly trained drivers available for immediate service.

(a) What is Amtrak’s annual demand for new drivers?

(b) What is Amtrak’s ordering cost?

(d) Viewing new drivers as inventory-type units, how large should the training classes be to minimize Amtrak’s total annual training and new driver idle-time costs?

(e) How many training classes should the company hold each year?

What is the total annual cost associated with your recommendation.

Reference no: EM131517140

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