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.
: The value of the stock you already have on hand at the start of the period. Types of OTB open to buy
: Anticipated price reductions for clearance or promotions. : The target value of stock you want
: The target value of stock you want to have left over to start the next period. Core Purpose : Allows retailers to spend money
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
: Allows retailers to spend money on new products or replenishment based on actual performance data. The Standard OTB Formula
In a personal finance context, "open to buy" can also refer to the on a consumer account, such as a Sam's Club credit card. It represents the amount of credit remaining that the cardholder can use for new purchases. [Video] Open to Buy Explained + Template Walkthrough