If a boutique clothing store is planning for October with these projections: $20,000 Planned End-of-Month Inventory: $15,000 Planned Markdowns: $1,000 Beginning Inventory: $18,000 On-Order Inventory: $4,000 The calculation would be: OTB . Key Implementation Details Open to Buy (OTB) Guide - Retail Dogma
The value of projected discounts or price reductions.
The revenue you expect to generate during the period. open to buy formula
The desired stock level you want to have at the end of the month or season.
OTB=(PlannedSales+PlannedMarkdowns+PlannedEnd−of−PeriodInventory)−BeginningInventory−On−OrderInventorycap O cap T cap B equals open paren cap P l a n n e d cap S a l e s plus cap P l a n n e d cap M a r k d o w n s plus cap P l a n n e d cap E n d minus o f minus cap P e r i o d cap I n v e n t o r y close paren minus cap B e g i n n i n g cap I n v e n t o r y minus cap O n minus cap O r d e r cap I n v e n t o r y If a boutique clothing store is planning for
The value of the stock you have on hand at the start of the period.
The formula is a retail inventory management tool used to determine the remaining budget available for purchasing new merchandise while maintaining ideal stock levels. Core Formula The standard way to calculate OTB is as follows: The desired stock level you want to have
The value of orders already placed but not yet received. Example Calculation