OTB - Month
Open to Buy (OTB) Open to Buy (OTB) Monthly Calculator Explained::
(a) What is this? This calculator tells you how much you should spend purchasing product each month.
(b) What does it tell me? The OTB essentially tells you the difference between how much inventory is needed and how much is actually available. This includes inventory on hand and any outstanding orders. Astute retailers will hold some OTB $ back in order to take advantage of deals, or to ensure fast selling items can be purchased to re-stock shelves.
(c) Why should I use it? Good inventory control is critical to ensuring you have an adequate level of stock on hand for the volume of sales being generated. Having too much stock, or indeed the wrong sort of stock, can slow the cash flow of a business and reduce profits with too many mark downs. On the other hand if you under buy and miss sales opportunities then you are not making your potential profit. Using an Open To Buy (OTB) Plan can help assist a retailer have the right products at the right time.
(d) Caution: This calculator is a method of determining what volume of stock you should be buying. It does not tell you what to buy, nor does it tell you about seasons, competitive issues or any other of the myriad of issues that can impact purchasing. A common issue is having the right $ of stock, but the wrong items. Decisions made as a result of using this calculator are at your risk.