The RanX Corporation produces a line of luggage goods. The normal distribution plan is to produce to a finished-goods inventory located at the plant site. Goods are then shipped to company-owned field warehouses by way of common carriers. Rail is now used to ship between an East Coast plant and a West Coast warehouse. The transit time is 21 days. At each stocking location, there is an average of 100,000 unit of luggage maintained at an average value of $30 per unit. Inventory-carrying costs are 30% per year. The company wishes to select the mode of transportation that will minimize total costs. It is estimated that for every day transit time can be reduced from the current 21 days, inventories can be reduced by 1%. There are 700,000 units sold per year at the West Coast warehouse. The can use the following transport services:

Which transport service should be used? ( Assume that procurement costs are negligible.)

\begin{tabular}{|c|c|c|c|} \hline Transport Service & Rate \$/Unit & Door-to-DoorTransitTime,Days & No.ofShipmentsPerYear \\ \hline Rail & 0.10 & 21 & 10 \\ \hline Piggy-back & 0.15 & 14 & 20 \\ \hline Truck & 0.20 & 5 & 20 \\ \hline Air & 1.40 & 2 & 40 \\ \hline \end{tabular}