Retailers need some type of planning and control device to guide their

activities towards the achievement of their stated goals and objectives.

Most retailers develop merchandise plans for the entire store, which provide
for an effective control over purchases and to prevent the department
or store from becoming overstocked or under stocked.

The merchandise plan is a projection (in rupees) of the sales goals of

the store or department over a specified period of time-usually six months.

In other words, the merchandise plan is a forecast of specific merchandise

purchases in rupees that typically covers a period of six months or an year.
Uses

•It is used to determine how much money is required to buy the

merchandise.

•Helps top management judge the effectiveness of merchandising

decisions that were made.
METHODS OF MERCHANDISE PLANNING

Top-Down Planning
This involves top level management estimating total sales for the upcoming
period. Then, expected sales are planned for each department according to
its past contribution to the sales of the entire store.

Advantage
In this, top management tends to have a better perspective of all economic
and competitive conditions facing the business than would other employees.

Bottom-Up Planning
In this, the planned sales for the store are determined by adding together the
planned sales figures that are developed by each department manager.
Planned sales figures for all departments are then totaled to arrive at planned
sales for the store.
Many retailers use both the Top-down and the Bottom-Up methods, then
arrive at the final planned sales figure for the store and each department
through a process of discussion and compromise.
 TOP-DOWN PLANNING

Store Forecast(Rs 2,00,000)

Women’s Children’s
Men’s( Rs 1,00,000)
( Rs 60,000) ( Rs 40,000)
 BOTTOM-UP PLANNING

Women’s Children’s
Men’s( Rs 1,00,000)
( Rs 60,000) ( Rs 40,000)

Store Forecast(Rs 2,00,000)

SIX MONTH MERCHANDISE PLAN

Most retailers use a six month merchandise plan to represent planning efforts.

The six month merchandise plan is the tool that translates profit objectives
into a framework for merchandise planning and control.

The plan is normally established to conform to two distinct selling seasons-

•Spring Summer( February to July),and,
•Fall Winter( August to January).

Using these months allows the stores the opportunity for clearance sales
at the end of Summer and Christmas seasons before making plans for
additional purchases.
PURPOSES OF THE PLAN

The merchandise plan regulates inventory levels in accordance with

planned financial objectives.

Key purposes are:

•To provide an estimate of the amount of capital required to be invested

in inventory for a specific period.

•To provide an estimate of planned sales for the period that translates into
cash-flow estimates for store management and accounting personnel.
Outcomes of developing a successful merchandise plan:

•Increased turnover.

•Reduced amount of markdowns.

•Improved ability to maintain markups.

•Maximized profits.

•Minimized inventory investment.

Components of the Plan

Initial markup for the period-desired markup that should be placed on

merchandise when it enters the store.

Planned Net Sales-gross sales minus customer returns and allowances.

Planned Beginning of Month Inventory-stock at the beginning of the month in

order to achieve planned sales.

Planned End of Month Inventory- retail value of the ending inventory for each
period.

Planned Reductions- total of planned markdowns, shortages and employee

discounts.
Planned purchases at retail- retail value of the merchandise that is to be
purchased during a given period.

Planned purchases at cost- amount of money that the buyer expects to

spend on merchandise purchases during a given period.

With the exception of planned purchases at cost, all amounts on the six
month merchandise plan are entered at retail values.
Each component is further subdivided into the following four categories:

Last year(Actual)- represents actual amount last year for the month.
This information is found on the previous six month merchandise plan from
actual sales recorded.

Plan( this year)- represents the amount planned for this year.

Revised( this year)- represents any revisions made in the current plan owing
to unanticipated events.

Actual( this year)- represents the actual sales for the month.
The six month merchandise plan is one of the most important planning
and control tool because it shows the amount the company should spend
on new inventory purchases to achieve planned sales. Also, it keeps a
check on overspending.
FORMAT OF A SIX MONTH MERCHANDISE PLAN
 FORMAT OF A SIX MONTH MERCHANDISE PLAN
Plan( this Actual ( Last
              year) Year)
Department Name:       Cash Discount %    
Department No:       Season Stock Turnover    
Merchandise Manager:       Shortage %    
Buyer:       Average Stock    
Period:       Markdown %    
                 

    FEB AUG MAR SEP APR OCT MAY NOV JUN DEC JULY JAN SEASON TOTAL
                 
Last Year              
Plan              
Sales % of Increase              
Revised              
Actual              
Last Year              
Plan              
Retail Stock(BOM)
Revised              
Actual              
Last Year              
Plan              
Retail Stock(EOM)
Revised              
Actual              
Last Year              
Plan              
Reductions
Revised              
Actual              
Last Year              
Plan              
Purchases at Retail
Revised              
Actual              
Last Year              
Plan              
Purchases at Cost
Revised              
Actual              
                 
PREPARATION OF A SIX MONTH MERCHANDISE PLAN
PLANNING SALES

•The first and most important part of merchandise plan is forecasting sales.

•All other merchandising decisions are planned in relation to sales or stated

as a percentage of sales.

•Actual planning begins with sales.

•Planned sales figures should be as accurate as possible, because this figure

is the basis on which all other figures are planned.

•Sales are planned on a net basis( gross sales- customer returns).

•Realistic sales planning is critical because sales are the key to profit.
Factors influencing sales

Sales are dependant on customer’s ability and motivation to buy.

1.External factors- beyond the scope of the retailer.

•Employment conditions.
•State of the economy.
•Inflation.
•Population trends.
•Changing competitive situation.
•Fashion.

2. Internal factors
•Additional stores opening.
•Physical changes within an existing store.
•Increased emphasis on store promotions.
•Stronger emphasis on specific categories of merchandise.
It should always be remembered that plans should be based on facts in
order to be realistic.

In order to make a six-month merchandise plan, we begin by determining

the sales goals for the store.

One must always remember:

•All planning begins with sales.

•Plans must be realistic.
Sales figures are analyzed by using the following steps:

•Obtain sales from last year for each month of the plan.
•Determine projected sales volume for each month in the plan.
•Figure percent increase or decrease of planned sales over the last year’s
actual sales.

To determine percent increase or decrease in sales, divide the difference

between this year(TY) planned sales and last year’s(LY) actual sales by last
year’s actual sales.

% Sales Increase or Decrease= TY Planned Sales-LY Actual Sales

LY Actual Sales
Example 2

Given: Current Year Planned Sales=2,50,000

Previous Year Actual Sales=2,70,000

% Sales Decrease=2,70,000-2,50,000
2,70,000

=-0.074=7.41% decrease
Example 3: Given the following figures, plan the sales for the month of
November.

Month Sales LY Sales TY % Increase

July 268000 288100 7.5%
August 292500 316193 8.1%
September 286749 314196 9.57%
October 281119 306376 8.98%
November 324500    

The % increase varies from 7.5% to 9.5%. Taking an average, for Nov,
the merchandiser would plan 8.5% increase.
Planned sales for Nov= 324500+(8.5/100*324500)= Rs. 352083
Exercise Problems

1.Planned sales for August TY are Rs. 1,45,000. If the actual sales for the month
LY were 1,30,000, what is TY’s planned % increase in sales?

2. Actual sales in the stationary department LY totaled 5,18,000. If the department

Planned a 15% increase for TY, what is the amount of sales planned?

3. Because a reduction in the number of stores with a yard goods department,

the buyer is planning a 20% reduction in sales for the department. If LY sales were
2,18,000, what is the buyer’s planned sales figures?

4. Sales for August TY totaled Rs. 90,000, and for September Rs 96,000. If the
planned seasonal sales distribution is as follows, figure the Rs sales for the
remaining months of the period.

August 15%
September 16%
October 14%
November 19%
December 24%
January 12%
PLANNING STOCKS

Stocks represent capital investments, and retailers are vitally interested

in return on capital investment.

The buyer determines the amount of stock needed at the beginning of

the month(BOM) in order to meet planned sales figures.

The End of month inventory (EOM) stock for one month is the same as
the BOM inventory for the following month.

Retailers use a variety of methods in order to maintain a balanced inventory

in relation to estimated sales.
These methods include:
1.The Basic Stock Method
2.The Week’s supply method
3.The Stock-sales ratio method.
Turnover is an important tool in evaluating efficient use of capital invested
in inventory( stock).

Stock Turnover

Stock turnover( also referred to as stock turn or inventory turn)serves as a

guide to determine the store’s efficiency.

Stock turn is defined as the number of times the average stock is sold
during a given period of time in relation to the sales for the same period.
To determine stock turn at retail, both sales and stock figures must be
expressed as retail values.

Stock Turnover= Net Sales at retail / Average Stock at Retail

Most commonly, stock turn is figured based on a year or six months,

however, it may be determined for a week, a month, three months or any
period of time.
Figuring Stock Turnover at Retail

In order to determine stock turnover at retail, we need to calculate average stock.

Average stock= BOM stock for each month in the period + EOM stock for Last Month
No. of months in the period +1
Example 1

Figure the stock turn at retail for a period of one month when given:

Rs 32000 BOM stock at retail, Rs 38,000 EOM stock at retail and

Rs 14000 net sales for the month.

a. Average Stock=BOM stock for each month in the period + EOM stock for Last Month
No. of months in the period +1

=32000+38000
1+1
=70,000
2
=35,000

b. Stock Turn= Net Sales/ Avg Stock

=14,000/35,000=0.4 for the month
Example 2

Figure the stock turn at retail for a six month period, Feb through July.

Net Sales for six month period were Rs 88,000.

Month BOM Stock

Feb 39000
Mar 38000
Apr 35000
May 35000
Jun 34000
Jul 26000
Aug 33000
Average stock= BOM stock for each month in the period + EOM stock for Last Month
No. of months in the period +1

=39000+38000+35000+35000+34000+26000+33000
7

=Rs. 34,286

Stock Turn= Net Sales/ Avg Sales

= 88,000/34286
=2.57
If stock turn equals net sales divided by average stock, if follows that
average stock= net sales divided by stock turnover.

Average stock=Net Sales/ Stock Turnover

Example 3

Figure out average stock when net sales are Rs 55,000 and the stock
turn is 3.5

Average stock=Net Sales/ Stock Turnover

=55,000/3.5= Rs.15,714
Exercise Problems

1.A store had BOM stock of Rs 3,00,000 at retail. Net sales for the month
were Rs 1,46,000. The EOM inventory was Rs 3,50,000. What was the stock
turnover for the month?

2. Junior dresses had an opening inventory of Rs 36,000. Net sales for the
period were Rs 12,389. If the closing inventory were Rs 37,000, what was
the rate of stock turnover for the period?

3. Determine the average stock in a department with annual sales of

Rs 16,50,000, and an annual stock turn of 4.5
4. What is the six month stock turnover based on the following figures and
net sales of Rs 4,50,000?

Feb 60000
Mar 63000
Apr 75000
May 72000
Jun 68000
Jul 65000
Aug 75000
5. Fine the turnover for the six month spring season(February-July) from
the following data:
Sales BOM Stock
Feb 10000 21000
Mar 18000 18000
Apr 16000 25000
May 12000 26000
Jun 14000 29000
Jul 10000 24000
Aug 6000 18,800
Sep 12000 26000
Oct 11000 25000
Nov 14000 29,500
Dec 19000 35000
Jan 13000 24000
6. Using the data in the previous problem, calculate turnover for the
Following:

a. Four month period-Feb-May

b. Three month period-Oct-Dec
c. Month of June
Figuring out stock turnover at cost

Stock turnover may be calculated at cost. This is practical only when

records are kept at cost.
In order to figure stock turn at cost, both stock and sales figures must be
at cost values.
However, the cost method of figuring stock turnover is seldom used
because most retailers keep their merchandise records at retail.

Figuring stock turnover by units

Stock turnover can also be figured by units rather than by rupees.

Unit stock turn becomes practical with large or high priced items, such
as appliances, fine jewelry, furniture etc.
Example 1

Calculate unit turnover for the month, given:

BOM Stock of 100 units

EOM stock of 75 units
Units sold during the month=200 units.

a.Average Stock= BOM units+ EOM units

2
=(100+75)/2=87.5 units

b. Stock Turnover= Units sold/ average stock

=200/87.5
=2.28 per month
1. Basic Stock Method

This method of stock planning requires that the BOM stock be sufficient to
cover the sales for that month and allow for a reserve of basic stock.

Basic stock is defined as the minimum stock that should be maintained

at all times.

It is a reserve that provides some assortment for customer selection and

protects the department against stock contingencies.

This method is recommended when the annual stock turn is 6 turns or less
per year.

This method is based on the assumption that there should always be a

basic inventory on hand that remains constant regardless of the rate of
sale.
BOM Stock= Sales for the month+ Basic Stock

Basic Stock= Average Stock- Average Monthly Sales

Average Stock for the season=Sales for the season

Stock turnover for season
Example 1

A department has planned stock turnover of 4 and planned sales of

Rs 1,60,000 for a six month season. Plan the BOM stock for April if planned
sales for April are Rs 20,000.

a. Average stock for the season=Sales for the season

Stock turnover for season

=160000/4=40,000

b. Basic Stock= Average Stock- Average Monthly Sales

=40000-(160000/6)=13,333

c. BOM Stock= Sales for the month+ Basic Stock

=20,000+13,333= Rs. 33,333
2. Week’s Supply Method

The week’s supply method plans stock on a weekly basis by setting stocks
equal to a predetermined number of week’s sales.

It is applicable to merchandise that does not fluctuate much in sales volume

from week to week.

Example 2
If a stock turnover of 10 times a year is desired, how many weeks of supply
should be on hand at all times?

Solution:

Week’s supply= 52 weeks/ Desired Stock Turnover

=52 weeks/10
=5.2 week’s supply needed on hand every week
3. Stock Sales Ratio Method

Stock Sales ratio relates the stock on hand at the beginning or sometimes
the end of the month to the projected retail sales for that month.

For fast moving stocks, the stock sales ratio may be figured weekly.

During periods of high sales, a store or department can operate with a lower
stock sales ratio than during periods of slow sales.

Figuring stock sales ratio when retail stock and sales for a given period are
known:

Stock Sales Ratio= BOM Retail Stock/ Sales for the month
Example 1

Determine the Stock Sales ratio when BOM stock at retail is

Rs 50,000 and retail sales for the month are Rs 35,000.

Stock Sales Ratio= BOM stock at retail/ net sales for the month
= 50000/35000=1.43
Figuring BOM Stock when Planned Sales and Stock Sales Ratio
are known:

BOM Stock= Planned Monthly Sales* Stock Sales Ratio

Example 2:

The girl’s department had planned sales of 60000 for the month of
April. Past records indicate a stock sales ratio of 5.4 What should be
the planned BOM stock for April?

BOM Stock= Planned Monthly Sales* Stock Sales Ratio

=60000*5.4= Rs 324000
COMPARISON OF STOCK SALES RATIO AND STOCK TURNOVER

Both provide a measure of the relationship between sales and stocks

However the two differ in the following ways:

1.The period covered for stock sales ratio usually involves a shorter time
period than that of stock turnover. Stock sales ratio is figured for a single
month, whereas stock turnover is based on average stock.

2. Stock sales ratio is based on stock on hand at a specific time, usually the
beginning of the month, whereas stock turnover is based on average stock.
Practice Problems

1.At the beginning of September, sleepwear and robes had a retail stock of
Rs 65000. Sales for the month were Rs 18200. What was the stock-sales
ratio for September?

2. Planned sales in the lingerie department for August are 32000, and
the planned stock sales ratio is 3.8. On August 1, how much stock should be
on hand?

3. If planned sales for the month are Rs 18000, and the stock sales ratio
Is 1.5, what BOM stock is needed to realize the ratio?

4. Planned sales in the costume jewelry department for May are

Rs 130000, and the planned stock-sales ratio is 3.4. On May 1, how much
stock is needed?
5. What is the planned stock-sales ratio when BOM stock is planned at
64500, and planned sales are 29000?

6. During a six-month period, a department had planned sales of

Rs 180000, and planned turnover of 3.2. Using the basic stock method,
determine the BOM stock for March if planned sales for March are 28000?

7. A department has a planned stock turnover of 4.2 and planned sales of

Rs 2,52,000 for a six month period. August sales are estimated at 38,000,
and September sales at Rs 45,000. Using the basic stock method,
determine the BOM stock for August and the BOM stock for September.
8. Calculate BOM inventory values for February through July based
on the information given below:

Planned Stock Sales

Month Sales Ratio
Feb 96000 3.6
Mar 112000 3.2
Apr 144000 2.9
May 144000 2.9
Jun 176000 2.7
Jul 128000 3.4
PLANNING REDUCTIONS

Reductions reduce the retail value of the inventory and include markdowns,
discounts to employees and customers, and stock shortages.

Each must be anticipated, estimated and included in the planning process.

Markdowns are expressed as components of net sales.

Because markdowns are the largest components of reductions, many

retailers plan only markdowns rather than total reductions.

Markdown%=Amount of markdown/ Net Sales

Planned Markdowns(Rs)= Planned Sales*Planned Markdown%

PLANNING PURCHASES

A primary objective of merchandise planning is to assist the buyer in timing

the purchase of goods in order to maintain a balance between stock and
sales throughout the season.

Planned purchases are the amount of merchandise that is planned for delivery
to the store or department during a given period without exceeding the
planned closing stock for that period.

Planned purchases should be adequate to cover the sales and reductions to

be made during that month, as well as to provide an ending inventory that will
allow the following month’s sales to be made.

Planned purchases at Retail= Sales+ EOM Stock+ Markdowns-BOM Stock

Example1

Determine the planned purchases for the month of September given:

Sales for Sept = Rs.1,90,000

Stock for Sept 1=Rs 3,18,200
Markdowns = Rs 16500
Stock on Oct 1 =304800

Planned purchases at Retail = Sales+ EOM Stock+ Markdowns-BOM Stock

=(190000+304800+16500)-318200=Rs 193100
Example 2

Determine the planned purchases for the month of June, July

and August, given the following information:

Planned Planned Planned

Month Sales BOM Stock Markdowns

Jun 12500 42000 1900

July 17400 39000 2800
Aug 19000 43000 2200

Sept 20500 44000 1600

Solution

Planned purchases at Retail- Sales+ EOM Stock+ Markdowns-BOM Stock

Solution:

June July Aug

+Planned sales 12500 17400 19000

+EOM Stock 39000 43000 44000
+Markdowns 1900 2800 2200
-BOM Stock 42000 39000 43000

= 11400 24200 22200

CONVERTING RETAIL VALUE TO COST VALUE

Planned Purchases at Cost=Planned Purchases at Retail*(100%-Planned Markup%)

Example 1

If planned retail purchases for the month were 208000, and the planned
markup was 45%, determine planned purchases at cost.

Solution

Planned Purchases at Cost=Planned Purchases at Retail*(100%-Planned Markup%)

=208000*(100%-45%)
=208000*55%
=Rs 114400
OPEN TO BUY

The open-to-buy, also known as open-to-receive, serves as a control

device to see that purchasing is carried out according to the figures
outlined in the six month merchandise plan.

Through the open-to-buy, store management controls the purchasing activity

of the buyers so that only the merchandise needed to fulfill the plan is
procured and excessive purchasing of inventory is avoided.

The OTB is a control tool to see that purchasing is done according to the
merchandise plan.

Usually, the retailer does not purchase all of the inventory at the beginning of
the month, but rather at various times during the month.

Also, on the 1st of the month, the buyer may have outstanding orders, which
will reduce the amount of additional purchases allowed for the month.
The OTB enables the buyer to determine, as of any specific date
during the month, the amount of merchandise to be purchased for
delivery to the store for the balance of the month without exceeding
the planned closing stock level. The retail value of these purchases is
the OTB.

OTB may be defined as the calculation made at frequent intervals

throughout a given period to find the amount of merchandise that may
be received into stock during the period without exceeding the planned
closing stock level at the end of the period.

In its simplest form, OTB is calculated by subtracting the merchandise

available from the merchandise needed to meet the plan.

OTB= Merchandise Needed- Merchandise Available

Merchandise available to the buyer includes merchandise on hand,
merchandise received, merchandise in transit and outstanding orders.

The merchandise that the buyer needs consists of planned sales, planned
markdowns or reductions and EOM Inventory.

OTB= Planned Sales+ Planned EOM Stock + Markdowns-Inventory on Hand-Merchandise

on Order

It is important for buyers to hold back some of their OTB rupees for several
reasons:
1.New lines or items may appear that the buyer wishes to purchase.
2.Special promotions from vendors may become available.
3.Reorders may need to be placed to fill in staple stock or replace fast
selling stock.

Successful buyers know that some OTB should always be kept available to
allow them to take advantage of good buying opportunities and to react to
changing consumer demand.
Benefits and Uses of OTB

The OTB concept has two main goals:

First, the buyer is assured that a specified relationship between stock on

hand and planned sales is maintained.
Second, buyers are able to determine how to adjust merchandise purchases
to reflect changes in sales, reductions and purchases.

If effectively used, OTB allows the buyer to:

•Limit overbuying and under buying.

•Prevent loss of sales due to inadequate amount of stock.
•Maintain purchases within budgeted limits.
•Reduce markdowns.
•Increase sales.
•Improve stock turnover.
•Hold back purchase amount to reorder fast selling merchandise, to take
advantage of off- price merchandise, or to sample new merchandise.
INCREASING OTB

Sometimes a buyer is overbought or does not have sufficient open-to-buy

to make a desired purchase. Increasing the merchandise needed and/or
decreasing the merchandise available will increase the funds available
to purchase additional stock.

To increase an inadequate OTB or to correct an overbought situation,

the buyer may consider the following actions:

1.Increase the planned sales.

2.Increase planned markdowns.
3.Reduce the stock on hand.
4.Postpone outstanding orders to a later month.
5.Cancel outstanding orders.
6.Increase planned closing stock.
Example1:
A buyer had an inventory of Rs 30,000 on May 1 and planned EOM stock of
34,000 for May 31. Planned sales for the department were Rs 26,000 and
planned markdowns for the month were Rs 2,500. As of May 1, the buyer
had merchandise on order of Rs 8,000 at retail to be delivered during the
month. Planned initial markup was 45%. Calculate the buyer’s OTB at
retail and at cost as of May 1.

Solution:
OTB=Planned Sales+ Planned EOM+ Markdowns- Inventory on Hand-
stock on Order.
a.

Merchandise Needed:
Planned Sales 26000,
Planned Markdowns 2500
Planned EOM stock 34000
62,500

Merchandise available:
Actual BOM Stock 30,000
Stock on order 8000
-38,000

OTB at Retail 24,500

b. OTB at cost:

= OTB at Retail*(100- Initial Markup %)

=24500*(100-45%)
=24500*55%= Rs 13,475
Example 2: Determine the OTB as of June 15 given the following information( sales and markdowns for the
remainder of the month are the differences between plan and actual for the first 15 days).

Merchandise on hand, June 15 36,000

Planned Sales, June 1-30 26,000
Actual Sales June 1-15 14,000
Planned Markdowns for June 2000
Actual Markdowns, June 1-15 900
Planned stock at retail, July 1 30,000
Stock on order, June 15 3000

Solution
Merchandise Needed- June 15-30
Planned EOM Stock, June 30 30,000
Planned Sales, June 1-30 26,000
Actual Sales, June 1-15 -14,000
Balance of planned sales,
June 15-30 12,000
Planned Markdowns, June 1-30 2000
Actual markdowns, June 1-15 -900
Balance of planned markdowns,
June 15-30 1100

Total Merchandise Needed, June 15-30 43,100

Merchandise available as of June 15

Stock on Hand, June 15 36,000
Stock on order, June 15 3000
Total merchandise available,
June 15 - 39,000
OTB, June 15 4,100
Problem Exercises

1.On the basis of past sales and current business conditions, a buyer estimates
that October sales will be Rs 7,500. The stock at retail on Oct. 1 is Rs 20,000. and
Rs 6,000 stock at retail is on order for the month. Markdowns are planned at
Rs 700 per month, and the planned EOM stock is Rs 19,000. What is the buyer’s
OTB on October 1?

2. Given the following data, determine OTB as of May 10.

Stock on hand at retail, May 10 16,500

Stock on order, May 10 3,100
Planned BOM stock, June 1 17,800
Planned Sales for May 3,500
Actual sales as of May 10 1200
Planned Markdowns for May 3%
Actual Markdowns as of May 10 75
3. March figures for the misses’ dress department are as follows:

Planned Sales 84,000

Planned Markdowns 2,400
Planned BOM Stock 1,87,000
Outstanding orders 64,000
Planned EOM Stock 1,68,000
Planned markup % 49.5%

Calculate OTB at retail and at cost.

4.Determine the buyer’s OTB as of Nov 15 using the following information:

Planned Sales for Nov 80,000

Actual Sales, Nov 1-15 65,000
Stock on hand, Nov 15 1,00,000
Planned Stock, Dec 1 1,00,000
Planned markdowns 6000
Actual markdowns, Nov 1-15 2,800
Stock on order, Nov 15 20,000
5. A buyer had an inventory on June 1 of Rs 50,000 and a planned EOM
stock of Rs 60,000. As of June 1, the buyer had merchandise on order
of Rs 25,000 at retail to be delivered during the month. Planned markdowns
for the month were Rs 3,800 and planned sales were Rs 40,000.The
planned initial markup was 52%. Fine the buyer’s OTB for the month at
retail and at cost.