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?

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Rate, Time, Days /UnSize, Units 25.00 44.00 88,00 Transport Transit Shipment Mode Rail Piggyback 10,000 7,000 5,000 16 10 Truck