You are shipping 200 diamonds to a customer located 2,000 miles away. The average value of the diamonds is $1,500. You can ship via air for $500 and the diamonds will arrive in two days or you can ship via a specialty ground carrier for $200 and the diamonds will arrive in six days. You figure your inventory carrying cost is 25 percent. Your customer will immediately transfer funds to your bank account on receipt of the shipment. What is your total cost if you use the ground carrier? The air carrier? What other considerations are involved besides the cost?
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