1. Mighty Oaks Scenario (courtesy of Cornell University).

Mighty Oaks (MO) is an assisted living facility that provides its residents with senior lifestyle housing and basic healthcare services. MO trains its frontline staff to ensure residents receive good and compassionate assistance with daily life activities, such as taking medication, bathing, eating, and dressing.

Because the work is so challenging, five people leave their MO job at the end of every month. Assume that this rate of attrition is steady. To fill those vacancies, MO conducts training sessions to add 10 new workers to its frontline staff every two months. The training sessions take oneweek to complete and have a fixed cost of $2,000 no matter how many new hires are being trained.

After completing their training, workers are on call and assigned to part-time duties while they wait for a full-time spot to open. Management at MO has estimated that each on-call worker costs $7,500 annually.

Determine the following for the current recruitment strategy for Mighty Oaks.

1. What is the demand?

2. What is the current order quantity?

3. What is the annual holding cost per employee ?

4. What is the order cost for the recruitment strategy?

5. Determine the EOQ quantity for this recruitment strategy.