After the material is processed in Los Angeles, the amount needed to replenish the Los Angeles warehouse $(34,300$ CBM per year on average$)$ would be kept and the rest sent by rail to Kansas City. It would then be directly stocked in the Kansas City distribution center and used to replenish the warehouses. They expect that very little would need to be shipped back to the Los Angeles warehouse after the new system was operating for about six months.

Grainger management feels that it may be possible to make this change, but they are not sure if it would actually save any money and whether it would be a good strategic change.

$*$The data in this case have been developed for teaching purposes and do not represent the actual situation at Grainger. The data, though, are representative of an actual problem that Grainger and similar companies must address to efficiently run the supply chain.

Relative to the U$.$S$.$ distribution network, calculate the cost associated with running the existing system. Assume that $40$ percent of the volume arrives in Seattle and $60$ percent in Los Angeles and the port processing fee for federal processing at both locations is $$7\mathrm{.}00$ per CBM$.$ Assume that everything is transferred to the Kansas City distribution center by rail, where it is unloaded and quality checked. Assume that all volume is then transferred by truck to the nine existing warehouses in the United States. $($Do not round intermediate calculations and round your answers to the nearest whole number.