You are supply chain manager for a company Yard-Depot located in Huntsville. You found a drywall sheetrock manufacturing company in South Nevada and signed a deal to buy sheetrock from this company. Nevadaco. Monthly demand for sheetrock is 90,000 packs per month on an average, with a standard deviation of 10,000 packs. A trucking company. Nhaul will charge $4,000 per truckload (with a capacity of 15,000 packs) to transport drywall from Nevada to Huntsville. The average transit time for a truck haul is 6 days with a standard deviation of 2 days. You also contact a shipper, Rail agent that proposes to move drywall from Nevada to Huntsville and charges $3,500 per rail wagon that has a capacity of 30,000 packs of drywall However, its transit time is 10 days with a standard deviation of 4 days. Another shipper, Multi mode, can also move this product by using a combination of truck and railroad. Its shipment is 30,000 packs and transit time is 8 days with a standard deviation of 3 days. And Multi mode will charge $5,000 per shipment. You purchase drywall at $60 per pack and your annual inventory holding cost is 20 %.

a. Compute monthly transportation cost, inventory holding cost and total supply chain costs for the above three options and tabulate them .

b. Which option will you select and why. What other criteria will you consider in your making?