Inventory planning
Open-to-Buy Calculator
Know what you can buy. Before you place the order.
Plan your buying budget after stock and committed orders. All amounts at retail, in the same currency.
Your remaining buying budget
Available OTB at retail
USD 42,000.00
Retail value · for your planned period
Estimated OTB at cost
USD 18,900.00
Cost estimate uses a 45% cost-to-retail ratio. It is not a supplier quote.
How your budget adds up
- Gross retail receipts needed
- USD 62,000.00
- Less: already on order at retail
- USD 20,000.00
This is remaining merchandise capacity for the period, not cash available. Check payment timing and your cash budget before committing new orders.
From plan to purchase
Build a buying plan you can act on
Open-to-buy (OTB) answers one practical question: how much more merchandise can you commit to for a period? It balances the stock you want to sell and keep against what you already own or have ordered.
- 01
Choose a period
Use one week, month or season and one category or assortment. Gather your sales plan, beginning stock, ending-stock target and outstanding purchase orders for that same scope.
- 02
Match the value basis
Enter all five monetary amounts at retail value, excluding sales tax. Use the same currency throughout. Initial markup converts the remaining retail budget into an estimated merchandise cost.
- 03
Review before ordering
Calculate the budget, then compare supplier prices, arrival dates and payment terms with your plan. A positive result is buying capacity within the merchandise plan; it does not establish that you have the cash.
What to enter in each field
The calculation is only useful when sales, inventory and incoming orders share a period and valuation basis. Use 0 when an amount is genuinely zero; leaving a field blank does not mean zero.
- Planned sales
- Expected realized sales at retail, after planned price reductions and excluding sales tax. Use your forecast for this period, not last period’s revenue unless you have deliberately chosen it as the forecast.
- Planned markdowns
- The retail inventory value removed by price reductions. For example, reducing 100 items by 5 each creates 500 in markdowns. Count the reduction once; do not also enter sales at the original, unreduced price.
- Ending inventory
- The retail value you want left at the end of the period. This is a target, not today’s on-hand balance. A larger ending-stock target increases the receipts needed and therefore the buying budget.
- Beginning inventory
- The retail value of stock already on hand when the period starts. Exclude merchandise still on order. More beginning stock reduces the additional receipts needed to support the same sales and ending-stock plan.
- Already on order
- Outstanding merchandise due to arrive within this period, valued at retail. Exclude receipts already counted in beginning inventory and orders arriving later. Convert cost-valued purchase orders to a consistent retail basis first.
- Initial markup (IMU)
- The share of original retail price above merchandise cost. Cost of 45 and retail of 100 gives 55% IMU. This is different from markup on cost (about 122.22% here) and from realized gross margin after markdowns.
A blended IMU assumes a reasonably consistent merchandise mix. If categories have very different markups, calculate their plans separately. The currency selector changes the label only; it does not convert exchange rates.
How the open-to-buy formula works
Start with the inventory balance: beginning stock plus receipts, less sales and markdowns, leaves ending stock. Rearranging that balance gives the receipts required to support your plan.
1. Gross retail receipts neededPlanned sales + planned markdowns + planned ending inventory − beginning inventory
2. Net retail OTBGross retail receipts needed − already on order
3. Estimated cost OTBNet retail OTB × (1 − IMU ÷ 100)
The cost estimate uses the remaining share of retail, not the markup percentage itself. At 55% IMU, cost represents 45% of retail. Inputs accept up to two decimals; the final cost is rounded once to the nearest cent, with half-cents away from zero.
Worked example · one month
Where the 42,000 budget comes from
| Plan item | USD at retail |
|---|---|
| Planned sales | + 50,000 |
| Planned markdowns | + 2,000 |
| Target ending inventory | + 80,000 |
| Beginning inventory | − 70,000 |
| Gross receipts needed | = 62,000 |
| Already on order | − 20,000 |
| Remaining retail OTB | 42,000 |
At 55% IMU: 42,000 × 0.45 = 18,900 estimated cost. These are the example values loaded in the calculator.
What your result means for the next order
Positive: there is room in the plan. The example leaves 42,000 at retail after committed orders. Allocate that capacity across suitable merchandise, then confirm supplier cost and delivery timing. It is a budget ceiling under your assumptions, not an instruction to spend the whole amount.
Zero: the plan is fully allocated. With 62,000 already on order, the example has no remaining OTB. This does not prove that the assortment is balanced or that every product is sufficiently stocked; those decisions need item-level demand and stock information.
Negative: review existing commitments. Raising orders to 70,000 produces −8,000 retail OTB and −3,600 estimated cost OTB. Check whether receipts can be rescheduled, commitments adjusted or assumptions corrected. Buying nothing more does not erase the gap, and a negative cost estimate is not a promised refund.
Keep the plan current
Recalculate when sales expectations, markdowns, receipt dates or commitments change. If you switch from a full-period plan to a remaining-period plan, update the stock starting point, remaining sales and orders together. Mixing today’s stock with a full month of expected sales can overstate buying capacity.
In a rolling plan, one period’s ending inventory becomes the next period’s beginning inventory. Reconcile that flow rather than simply adding monthly budgets. This worksheet does not forecast demand, track live inventory, calculate reorder quantities or guarantee cash savings.
Formula and valuation references: Shopify’s open-to-buy guide explains retail planning; ISBE’s Business Math lesson, pages 3–5, covers on-order subtraction and the retail markup basis.
Continue your inventory decision
Inventory Carrying Cost
Estimate the expense of holding your planned stock before increasing your ending-inventory target.
Landed Cost per Unit
Allocate shipping and other shipment charges after selecting the products you intend to buy.
Working Capital
Compare current assets and liabilities as a separate check on short-term funding needs.
About This Calculator
Calculate your remaining retail buying budget after inventory and committed orders. Convert net open-to-buy to estimated cost and identify overcommitted plans.
Frequently Asked Questions
What is open-to-buy in retail?
Open-to-buy is a period merchandise budget. Add planned retail sales, markdowns and target ending inventory, then subtract beginning inventory and outstanding orders due in that period. The result is remaining capacity for new orders at retail value, not cash available.
How do I convert retail OTB to cost OTB?
Multiply net retail OTB by 1 minus initial markup divided by 100. Here IMU means (original retail price minus merchandise cost) divided by original retail price. At 55% IMU, 42,000 at retail becomes an estimated 18,900 at cost. Markup on cost and realized gross margin use different definitions.
What does negative open-to-buy mean?
A negative result means existing inventory and committed orders exceed the plan. Review order timing, commitments, expected sales and ending-stock targets before ordering more. This calculator preserves the negative amount instead of turning it into zero.
Should already-on-order merchandise be entered at cost or retail?
Enter outstanding merchandise due within this period at retail value, matching the other four amounts. Exclude stock already counted in beginning inventory and orders arriving in a later period. Convert cost-valued purchase orders to a consistent retail basis first.
Is open-to-buy the same as EOQ or inventory carrying cost?
No. Open-to-buy plans a monetary buying budget for a period. EOQ estimates an order quantity from demand and ordering/holding costs; carrying cost estimates the expense of holding stock. This worksheet does not forecast demand, synchronize inventory or provide supplier quotes.
The SuperCalc Editorial Team maintains calculator interfaces, formula notes, examples, and supporting explanations. Methods, assumptions, source links, and review depth vary by calculator and are documented on the relevant page where available.