OTB (Open to buy)
Open to Buy (OTB) is a retail merchandising term and financial planning tool used by retailers to manage their inventory levels, optimize purchasing decisions, and ensure that they have the right mix of products available to meet customer demand. Here are the key points related to Open to Buy (OTB):
1. Purpose: OTB is primarily used to control and allocate a specific amount of money (budget) for purchasing merchandise. Its main purpose is to balance inventory levels to meet customer demand without overstocking or understocking products.
2. Budgeting Tool: OTB serves as a budgeting tool that helps retailers plan their merchandise buying for a specific period, such as a month, quarter, or season. It ensures that the retailer does not exceed their purchasing budget.
3. Inventory Management: By setting an OTB budget, retailers can control their inventory levels and maintain a healthy inventory turnover ratio. This prevents overstock situations, which can tie up capital, and understock situations, which can lead to lost sales.
4. Sales Forecasting: Effective OTB planning requires accurate sales forecasts. Retailers use historical sales
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