If the annual holding cost rate for this type of item was 43% instead of 14%, it would be ideal to not stock such items due to exorbitantly high costs and follow a just-in-time production system, wherein the items are procured only to meet a demand. In such a case, the transportation time of the parts (once procured) should be short. Therefore, in this case, it is advisable to ship them by train against a higher cost of $2,500, which is justified