In terms of merchandising, what does OTB stand for?

In merchandising, OTB stands for "Open to Buy." This term is essential for managing inventory effectively and relies on careful financial planning. Open to Buy refers to the amount of money that a retailer has allocated for purchasing new inventory in a specific period without exceeding their budget.

Retailers use the OTB concept to ensure they are purchasing enough inventory to meet customer demand while avoiding overstock situations. This helps in maintaining optimal cash flow and reduces the risk of markdowns due to excess inventory. By calculating OTB, a retailer can make informed purchasing decisions based on the existing inventory levels, forecasted sales, and overall cash flow situation.

Understanding OTB is crucial for effective inventory management in merchandising, as it guides purchasing decisions and helps maintain a balanced assortment that aligns with sales goals and customer needs.