What would be faster, transferring a zipped file to flash drive then decompress there or transferring the unzipped files?
Unquestionably the correct answer is "transferring the unzipped files".
Of course transferring a zipped archive of all the files would be faster, but you have stipulated the additional step of "then decompress there".
Apparently you are not aware that you cannot "decompress" locally on the drive or storage device.
The source archive file has to be read (from where ever it is stored) and then decompression will be performed in main memory by the CPU.
So in order to unzip the file already transferred to the flash drive, the file has to be read from the flash drive, uncompressed, and then the individual files written to the flash drive.
That last step (of writing the individial files) alone is equivalent to the latter choice. So the additional steps of first writing the zip file(s) and then reading them back (but possibly optimized by caching) should made your first choice the longer operation.
Another way of looking at your question is assuming some amount of concurrency among operations and guessing at a timelime.
So for case 1, the copy of the zip file to the flash drive requires read operations concurrent with write operation (but with some block delay).
Writing also requires more time to perform than reading (e.g. see Why does copying the same amount of data take longer if spread across many separate files?).
Once the copy is complete then it can be read, decompressed and written back to the flash drive.
Despite the concurrency of the reading, decompressing, and writing operations, the overall timeline is dominated by the time to write all of the uncompressed files.
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Case 2 is a straightforward read, decompress and write.
This case should require the same amount of time to write all of the uncompressed files.
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How can you expect Case 1 to complete faster than Case 2 when the the first stage of read operations is for the same amount of data from the same device, and the last stage of writes is for the same amount of data to the same device
case 1 is handicapped by having to first perform a copy?