The value of orders already placed but not yet received. Example Calculation
The formula is a retail inventory management tool used to determine the remaining budget available for purchasing new merchandise while maintaining ideal stock levels. Core Formula The standard way to calculate OTB is as follows: open to buy formula
The desired stock level you want to have at the end of the month or season. The value of orders already placed but not yet received
The value of the stock you have on hand at the start of the period. The value of the stock you have on
The value of projected discounts or price reductions.
OTB=(PlannedSales+PlannedMarkdowns+PlannedEnd−of−PeriodInventory)−BeginningInventory−On−OrderInventorycap O cap T cap B equals open paren cap P l a n n e d cap S a l e s plus cap P l a n n e d cap M a r k d o w n s plus cap P l a n n e d cap E n d minus o f minus cap P e r i o d cap I n v e n t o r y close paren minus cap B e g i n n i n g cap I n v e n t o r y minus cap O n minus cap O r d e r cap I n v e n t o r y
The revenue you expect to generate during the period.