(Section 3, Part 4)
We recommend printing off the course content reference guide to assist you in the third section of How to Think Like a Buyer courses: Preparing the Six-Month Merchandise Plan.
Seven-Step Procedure for Calculating the Six-Month Merchandise Plan/Budget
After the buyer completes the Pre-Plan Stage, including the environmental scan of both the business and the domestic and global environments, and the Information Gathering Stage of analyzing numerical data from the previous year, same season, the buyer is prepared to begin the final stage (the Calculation Stage) for planning the budget for the upcoming season. Based upon the information found in the previous stages, the buyer has a substantial foundation upon which to make decisions for a realistic and attainable plan.
As previously discussed, the Calculation Stage is a seven-step procedure and includes the following calculations:
- Total Planned Sales and Total Planned Reductions
- Monthly Distribution of Total Planned Sales
- Monthly Distribution of Total Planned Reductions
- Beginning of the Month (BOM) Stock for each Month
- Ending of the Month (EOM) Stock for each Month
- Planned Purchases at Retail for each Month
- Open-to-Buy (OTB) or Planned Purchases at Cost
In this segment, each of the components of The Six Month Merchandise Plan/Budget will be calculated for the Spring/Summer six months.
Turnover & Stock/Sales Ratio
The retailer constantly monitors both the stock/sales ratio and the stock turnover in order to maintain stock levels that are conducive to profitable retail operations.
Stock/sales ratios are adjusted throughout the six-month selling period and stock turnover is evaluated for the entire season in order to develop more efficient and profitable merchandising activities and policies.