Question

5. An open-to-buy report was prepared on January 15. The following information was provided: January BOM January EOM January sales January markdowns January 5-12 purchases received January outstanding orders Determine the January ОTB. $ 86,000 $104,000 $ 52,000 $ 10,500 $ 11,000 $ 6,000 With the amount of merchandise on order, and noting that this open to buy has been prepared on the 15th, what concerns might a buyer face after reviewing these figures?

Answer 1

1. While determining OTB for a particular month we should not consider the purchases made during the month inorder to arrive at the exact OTB.
2. Here in the given question OTB for the month of January is calculated as, planned sales + ending inventory + markdowns - opening inventory which comes to 52000 + 104000 +10500 - 86000 = 80500.
3. The concern that a buyer face while reviewing the OTB is availability of funds to maintain the desired OTB in order to satisfy the demand for the product.
4. So OTB should be calculated at the beginning of the month to plan the buying process and also make sure the availability of funds.