The Wagner Company supplies electric motors to Electronic Distributors, Inc. on a delivered-price basis. Wagner has the responsibility for providing transportation. The traffic manager has three transportation service choices for delivery-rail, piggyback, and truck. He has compiled the following information:

Electronic Distributors purchases 50,000 units per year at a delivered contract price of $500 per unit. Inventory- carrying cost for both companies is 25 percent per year. Which mode of transportation should Wagner select?

\begin{tabular}{lccc} \begin{tabular}{l} Transport \\ Mode \end{tabular} & \begin{tabular}{c} Transit \\ Time, Days \end{tabular} & \begin{tabular}{c} Rate, \\ \$/unit \end{tabular} & \begin{tabular}{c} Shipment \\ Size, Units \end{tabular} \\ \hline Rail & 16 & 24.00 & 10,000 \\ Piggyback & 10 & 40.00 & 7,000 \\ Truck & 6 & 80.00 & 5,000 \end{tabular}