How Do You Calculate Open To Buy?
Open to Buy is calculated by subtracting the planned purchases or inventory on order from the total budgeted inventory. The formula is OTB = Budgeted Inventory – Planned Purchases – Inventory on Order. This calculation provides retailers with an accurate view of the amount of funds available to purchase new inventory and make informed decisions regarding inventory levels. It helps retailers avoid stock-outs and overstocking and allows them to stay within their budget.