How do you calculate open-to-buy?

How do you calculate open-to-buy?

To figure out your OTB at cost, multiply the OTB value by the initial markup. If your initial markup is 75%, for example, your open-to-buy at cost is $10,350 x 0.25 = $2,587.50.

How do I get an OTB plan?

Here are the simple steps to calculating your OTB.

1. Determine your planned sales – Based on history and other factors, forecast your sales for the month.
2. Determine planned markdowns – Based on your planned discounts and promotions, calculate the amount in dollars of product markdowns for the month.

What is open-to-buy date?

The open-to-buy through any given month is the planned ending inventory less the projected actual ending inventory. For prior months it quantifies whether the company was over-inventoried or under-inventoried.

What is a buying plan?

A buying plan, or buying club, is a type of plan that obligates a buyer to purchase items on a set schedule, to buy items that a seller may deliver without notice, or to pay membership fees for the opportunity to purchase at a supposed discount.

What is open to buy process?

In the simplest terms, open-to-buy (OTB) is a financial budget for merchandise buyers. By understanding inventory needs from a financial perspective, including revenue and margin, retailers gain insight into their open-to-buy process and ensure the organization will not overspend merchandising budgets.

Why do retailers adopt open to buy?

What is open to buy plan?

An open-to-buy plan is a purchasing budget for future inventory orders that a retailer creates for a specific period. An OTB plan helps a retailer stock the right amount of the right products at the right time by showing the difference between how much inventory is needed and how much is available.

Open to buy is a mathematical process that enables retailers to forecast their buying needs 12 months into the future based on anticipated sales and desired turn rates.

What is the definition of open to buy?

“Open to buy” is a financial term that is often utilized by brokers and dealers to describe the opening or establishment of a long position in an one or more option transactions. The exact approach to this strategy may involve the purchase of a put, a call, or a combination of the two with the idea…