A power plant in California uses coal at a rate of 100,000 pounds each day. It also uses MRO material at the rate of 1,000 pounds each day. The coal comes from Wyoming and the MRO material comes from Chicago. Coal costs $0.03 per pound, whereas MRO material costs $8 per pound, on average. Holding costs at the power plant are 20 percent of the cost per pound of material per year. Safety inventory of coal and MRO materials is kept at twice the consumption during the lead time of supply. The power plant follows a fixed order quantity inventory policy (i.e., fixed Q).
a. What mode of transport do you recommend for each of the two products?