Question Two Rafael de Andrade, CEO of Vale Company one of the world's largest mining companies in iron ore, believes that his company could significantly improve inbound supply costs for their steelmaking business from transportation by investigating the possibility of using various modes of transportation. Iron ore is considered one of the main raw materials in producing steel. At its disposal, Vale has a variety of intermodal combinations. Monthly demand is about 15,000 tons of iron ore. From the mine in Carajs (Brazil), iron ore is currently transported by rail directly to the steelmaking plant in Rio de Janeiro (2,500 km). However, other options are available. The raw material can be transported by rail to Port of Tubaro (905 km) or to Ponta da Madeira port terminal in the state of Maranho ({-RANDBETWEEN(250,350)) km). From Port of Tubaro, a sea ship can travel to port of Rio de Janeiro (500 km). From Ponta da Madeira port terminal, a sea ship can travel to port of Rio de Janeiro (-RANDBETWEEN(1150,1350); km). From the Port of Rio de Janeiro to the steelmaking plant, iron ore can be shipped via a train (50 km). A sea ship from the port of Tubaro costs $5/ton with a capacity of 3,000 tons. A sea ship from Ponta da Madeira port terminal costs $8/ton with a capacity of 15,000 tons. Rail tariffs for a capacity of 3000 tons is $15.4/ton for direct trip to the steelmaking plant. Rail tariffs for a capacity of 3000 tons is $10/ton for a trip from Carajs to the port of Tubaro. Rail tariffs for a capacity of 3000 tons is $5/ton for a trip from Carajs to Ponta da Madeira port terminal. Rail tariffs for a capacity of 3000 tons is S1/ton for a trip from Port of Rio de Janeiro to the steelmaking plant in Rio de Janeiro. Price of iron ore is $89 per ton (Ex works). Inventory holding cost is 3% per ton per month. In-transit inventory holding cost is 1% per ton per month. Operating speed of the iron ore train is 80 km/h and operating speed of the iron ore ship carrier is approximately 28 km/h. Safety inventory of iron ore is kept at twice the consumption during the lead time of supply. Which mode or intermodal of transport do you recommend and why? One month - 30 days and one day = 24 hours.