: Focuses on the actual cash amount the retailer will spend with vendors, providing strict financial guardrails.
: Prevents tying up cash in slow-moving items, which can hurt cash flow.
: The value of the stock you already have on hand at the start of the period. Types of OTB open to buy
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
: Tracks the number of items rather than their dollar value, which is helpful for replenishment and allocation across multiple locations. Alternative Meaning: Credit Cards : Focuses on the actual cash amount the
The primary goal of OTB planning is to maintain the right inventory balance.
: Anticipated price reductions for clearance or promotions. Types of OTB is a financial planning strategy
Retailers typically use a basic formula to determine their available budget (often calculated in retail dollars):