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We have two different warehouses for e.g. once is in CA and other is in VA.

We need to ship product based on state which provides low rate. We prepare list like NY should be served by VA. We also wants UPS to calculate shipping rates based on near by warehouse. Am I able to achieve this by default feature in Magento? If not, is there any code sample/trick you can suggest to achieve it? Do you suggest to use any extension? if yes, which will be best? I checked with some inventory management tools with multi warehouse but none of supports shipping rate calculation via UPS based on state selection for shipping.

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You can use the Magento MSI feature. It is possible to create sources (warehouses) with their quantities for each region. Next, when you create a shipment, a source (warehouse) can be selected. However, your product price or shipping costs can not vary by warehouse.

MSI Customer Source Selector extension enables warehouse specific pricing and shipping costs. Your customer can estimate product prices, shipping costs, taxes and choose a warehouse that matches best. Also, you can adjust this extension to select a warehouse according to your algorithm automatically.

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