Nation-Wide Bus Lines is proud of the six-week driver-training program it conducts for all new Nation-Wide drivers.

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Nation-Wide Bus Lines is proud of the six-week driver-training program it conducts for all new Nation-Wide drivers. The program costs Nation-Wide $22,000 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 program must provide the company with approximately five new fully trained drivers per month. After completing the training program, new drivers are paid $1,800 per month but do not work until a full-time driver position is open. Nation-Wide views the $1,800 as a holding cost necessary to maintain a supply of newly trained drivers available for immediate service. Viewing new drivers as inventory SKUs, how large should the training classes be in order to minimize Nation-Wide’s 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?

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