Inventory purchase budget based on sales plan (Target)
Usually done at the category level, if necessary, you can drill down to sub-levels even down to SKU level
Desired End of Month (EOM) inventory
Plus sales and markdowns
Minus Beginning of the Month (BOM) inventory and on order and receipts
Equals Open To Buy
The component that makes the open to buy calculations difficult is the fact that the end of month and markdown values are based on forecast. A good forecast requires excellent knowledge of the customer, market, store, competition and of course the product.
Benefits of Open - To - Buy:
Estimate in advance capital required for inventory
Ensure right inventory levels for planned sales
Control merchandise commitments
Establish objectives so that actuals can be compared with
Provide opportunity for more profit
This webinar will show you the best ways to achieve proper inventory planning.