H&M’s chief demand planner has estimated that 9,250,000 units of clothing will be sold in 2021

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H&M’s chief demand planner has estimated that 9,250,000 units of clothing will be sold in 2021. H&M’s
cost of placing and processing an order is R250, while the annual cost of holding a unit in its distribution
centre is projected at 5% of the unit purchase price. Both costs are expected to be constant for the
foreseeable future. On average H&M sells a unit of clothing for R300.00 at cost plus 50%. Orders are
received two weeks after being placed with the supplier. Assume a 365-day year and that demand is
constant throughout the year.
Furthermore, as part of the drive towards operational efficiency, the chief demand planner is thinking
about using the seasonally-adjusted moving average method to forecast demand for H&M’s clothing
for the 2021 financial year. In this regard, Mrs Masuku has retrieved from the retailer’s database the
following information on number of clothing sold over a four–year period.
Year Quarterly sales (‘000 units)
Q1 Q2 Q3 Q4
2016 1300 1500 1200 2000
2017 1600 1800 1100 2200
2018 1700 1900 1300 2300
2019 1800 2100 1400 2500
Study the information provided above and answer the following questions: Calculate the economic order quantity (EOQ).