Question

Problem 4.2

                                                   Open-to-Buy Problem

Jane buys men’s sport shirts. She is in the process of estimating her June and July open to buy. As of June 10, she has actual stock on hand of $1,543,768. Jane’s area has had sales of $235,333 (against total June planned sales of $638,950). Total June markdowns of $25,238 (out of a plan of $75,862) have also been taken. The current on-order for June is $115,338, of which Jane expects that $15,000 will not arrive until July. Likewise, of the July on order of 20,432 she expects $12,000 to arrive in June. The June EOM plan is $1,210,562. Before calculating her OTB Jane decides that, if she is overbought, she will return $36,000 worth of knit shirts to one of her vendors for credit.

The July sales plan is $433,985 while the July markdown budget is $65,666. She expects $2,000 of the July on order to be past due. Likewise, she expects that $3,000 of the August on-order will arrive in July. The July EOM plan is $722,500.

Use the attached OTB worksheet to estimate Jane’s total open-to-buy for June and July.

                               Table 8

         Estimated OTB for the Month of                                

Category	Amount
Stock on Hand (as of              )	$
Remaining On-Order
Total Liability
Remaining Sales
Remaining Markdowns
Estimated Past Due
Estimated Early Ships
Estimated EOM
EOM Plan
Over/Under Bought
Adjustments
Adjusted OTB
Adjusted Estimated EOM

            Table 9

         Estimated OTB for the Month of                                

Category	Amount
Estimated BOM
On-Order
Total Liability
Planned Sales
Planned Markdowns
Estimated Past Due
Estimated Early Ships
Prior Month Past Due
Prior Month Early Ships
Estimated EOM
EOM Plan
Over/Under Bought
Adjustments
Adjusted OTB
Adjusted Estimated EOM

Answer 1