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How do I calculate Open To Buy
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    How do I calculate Open To Buy

    by RetailEdge Moderator » Fri Oct 03, 2014 11:19 am

    OTB is defined (depending on where you look) as:

    Ending Inventory - Beginning Inventory + Sales + Markdowns (see the chart below)

    Image

    Typically this is done by category (department/vendor/class, etc.). It is projection based on some starting inventory value. In the case of the chart below it is the beginning of July and we have an inventory value of $155,000. You can see the subsequent values are projected based on the Ending inventory for the previous month.

    Three Reports to use.

    Purchase Order - Summary by Ship Date
    Sales by Category Report
    Discount Summary

    There are various OTB schemes that do it based on units, costs or retail price. In this case you should be doing the valuations at retail.

    We do some work with Open to Buy/Forecasting companies (RMSA and Management One) that get more sophisticated and do projections based on industry trends. They will also will group 2 or 3 different departments into one department or they will recommend moving items into different departments so that they can do better forecasting.
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