Question 1: Supply Chain Management [25] Pratt & Whitney, a major aircraft engine manufacturer, wants to re-evaluate the transportation mode it uses to send unfinished parts to its joint-venture facility in Chengdu, China. 7 Annual demand is 2,900 units. At present the company uses air freight. It takes approximately six days from Los Angeles to Chengdu (including pick-up and delivery and customs delays). There are 20 parts in a lot, each weighing 30 kilograms. The air freightcost per part is $90. The pick-up and delivery charges at origin and destination add up to $15 per part. The alternative is to use an ocean liner to ship the parts to Shanghai and from there to use either a truck or a train (a 2,000 km distance). The ocean freight for this lot size will cost $30 per part and will take 15 days. The truck from Shanghai to Chengdu will cost $20 per part and will take six days (including pick- up and delivery and customs delays). Transportation by rail will cost $15 per part and will take 14 days (including pick-up and delivery, customs, and transfer delays). In addition, for rail there is a $10 per part charge for pick-up and delivery. The company's inventory holding cost rate is 12 percent per year, and the value of each part is $1,000. Assume 365 days per year. Due to variability of lead times, at the destination, safety stocks of 60, 210, and 290 units will be kept if air, ship and truck, and ship and train are used, respectively. The value of a part in Chengdu for calculating the safety-stock holding cost should include the freight cost. a) Determine the cheapest mode of transportation for the total freight, delivery, and in-transit and safety holding cost of these parts