1 Square City Appliance orders four types of washing machines. Table 7 gives the annual demand, purchasing cost, and annual holding cost (as a percentage of purchase cost), and the fixed cost of ordering a product. Determine an ordering policy that minimizes the sum of fixed and holding costs. Each time an order is delivered, a $10,000 cost is incurred. Determine an ordering policy to minimize annual cost of meeting demand.

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TABLE 7 Product 1 Product 2 Product 3 Product 4 Annual demand 10,000 3,000 4,000 500 Unit purchasing $400 $300 $200 $900 cost Holding cost .2 .2 .2 .2 percentage Product order cost $1,000 $1,000 $1,000 $1,000