What is Open-to-buy?
Open-to-buy is the purchasing budget still available for a planning period after inventory and open orders are considered. OTB connects assortment and inventory planning with cash constraints, so purchase proposals are prioritized financially as well as operationally.
Formula
OTB = planned demand + planned ending inventory − current inventory − open orders
Practical example
Of a planned 500,000 euro merchandise budget, 120,000 euros remain after inventory effects and open orders.
What teams should remember
- Open-to-buy is the purchasing budget still available for a planning period after inventory and open orders are considered.
- OTB connects assortment and inventory planning with cash constraints, so purchase proposals are prioritized financially as well as operationally.