A phone retailer buys three phone models from the same supplier. The retailer pays per unit cost of each product of $100, $120 and $150 for the three models. The supplier charges $200 per order, independent of the quantity and models of the products purchased, which includes the cost of order processing, shipping and insurance. Holding costs are based on a 25 percent annual interest rate. The retailers sells an average of 35,000, 30,000 and 25,000 units of the three models, respectively.

1. a) Analytically, i.e. without the use of a computer, provide a heuristic for the three-product ordering decision.

2. b) Find the optimal procurement decision numerically.