• Question 3.One subcomponent in this electric motor is also used in two other products manufactured by ABC. ABC's president has told you that the company expects to use 5,400 (annual quantity = AQ) of these subcomponents during the next 12 months, with a consistent demand for them month-to-month (and a consistent demand during each month, with the business day daily demand, DQ, being 22). He has further told you that it costs $10 to place an order (order cost = OC) for this subcomponent (regardless of the quantity ordered), that the annual holding cost is $2 per unit (unit holding cost = UHC). Finally, he has stated that out of 21 business days per month, there is a five business day lead time (LT = 5) associated with ordering this subcomponent.
• Provide the algebraic equation for thereorder point(RP, using DQ and LT as variables).
• Calculate and provide the numerical EOQ, rounded to the closest whole number.