A large manufacturer uses two factors to decide whether to use truck or rail for movement of its products to market: cost and total travel time. The manufacturer uses a utility formula that rates each mode. The formula is U = 5C + 10T, where C is cost ($/ton) and T is time (hours). For a given shipment of goods, a trucking firm can deliver in 16 hours and charges $25/ton, whereas a railroad charges $17/ton and can deliver in 25 hours.
(a) Which mode should the shipper select?
(b) What other factors should the shipper take into account in making a decision? (Discuss at least two.)
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