This calculator requires the use of Javascript enabled and capable browsers. This script calculates the open to buy amount, in both retail and cost figures, for a typical time period of one month. The formula is ((Planned Sales + Planned Markdowns + Planned EOM Inventory) - (Actual BOM Inventory)). The begining of month inventory is as close to actual as possible and the other (PLANNED) figures are for the SAME month.
Enter the PLANNED Sales, PLANNED markdowns and PLANNED EOM inventory; then enter the ACTUAL beginning inventory. If you know a realistic inventory average markup, enter it; if not enter zero (0). Enter it as a whole number. If you have established a holdback percentage figure, enter it as a whole number; if not enter zero (0). For instance for either of the percent entries, 35% would be entered at 35 (although 35.5 is legitmate for 35 and a half percent). Click the Calculate button; read the open to buy (OTB) retail and if you entered a markup, the open to buy at cost. If you entered a holdback percentage, that amount is deducted from both retail and cost OTB figures and is shown as the withheld holdback. The OTB at Cost figure is what the company buyers want to see; it is more or less a budget and free ticket to purchase goods. You may click on Clear Values and do another. You MAY enter a decimal for figures. Do not enter commas or a dollar sign (, or $).
Open to buy is considered as crucial in maintaining a good inventory control, and for generating strong future inventory based sales. Having an incorrect inventory can damage the company's cash flow and cause the situation for markdowns to turn the inventory in order to raise cash. Having a hold back from the OTB can be a retained balance of the budget for special purchases as needed, or as they come available. That amount is generally NOT given to the buyers automatically and also may not be needed each and every month. For example, November is a typical case for a holdback so that "special purchase" items for quick Christmas sales in December can be obtained within budget.
