Business profits are driven by careful planning. This includes developing business plans that evaluate and forecast:
- sales, working with the sales volume, or net sales
- stock, including stock-to-sales ratios, average stock, and turnover.
- markdowns (stock reductions)
- purchases both at retail and at cost
Calculating available purchases, known as the Open-to-Buy (OTB), which is the dollars available to spend during a specific period of time, is a constantly changing number that provides a check and balance system to maintain merchandise flow. Calculating OTB, merchants are able to control and maintain a steady merchandise flow and keep stocks balanced to the merchandise plans.
And ultimately building successful stock plans that provide products and services that meet their customer’s product needs, taste levels and price points.
Learn more about the basic math skills to help you plan and forecast your business goals in Section Three of Math for Merchandising Retailer’s Handbook.