Open To Buy <EASY 2027>

: Anticipated price reductions for clearance or promotions.

: Allows retailers to spend money on new products or replenishment based on actual performance data. The Standard OTB Formula

is a financial planning strategy used by retailers to calculate how much inventory they should purchase over a specific period. It acts as a buying budget that balances current stock against sales goals and markdowns to ensure a store has enough product to meet demand without overspending or overstocking. Core Purpose open to buy

Retailers may track OTB in different ways depending on their specific needs:

: Focuses on the actual cash amount the retailer will spend with vendors, providing strict financial guardrails. : Anticipated price reductions for clearance or promotions

OTB=(Planned Sales+Planned Markdowns+Planned End-of-Month Inventory)−Planned Beginning-of-Month Inventorycap O cap T cap B equals open paren Planned Sales plus Planned Markdowns plus Planned End-of-Month Inventory close paren minus Planned Beginning-of-Month Inventory : The total revenue expected for the period.

: Prevents tying up cash in slow-moving items, which can hurt cash flow. It acts as a buying budget that balances

: Focuses on the expected selling price of the merchandise, useful for high-level strategic planning.