Retail Open-to-Buy Calculator
Enter one period of sales, reductions, inventory, and outstanding orders to find the remaining merchandise budget. The calculator shows open-to-buy at retail and converts it to cost dollars for a proposed supplier order.
Available purchasing budget$21,600.00
- Planned purchases at retail
- $58,000.00
- Open-to-buy at retail
- $48,000.00
- Open-to-buy at cost
- $21,600.00
- Overbought amount
- $0.00
- Budget after proposed order
- $9,600.00
- Proposed order status
- Within budget
Use one planning period and the same retail valuation basis for sales, reductions, inventory, and committed orders.
A zero cost complement produces a zero cost budget and cannot provide a meaningful cost conversion.
How to use this calculator
- Enter planned net sales and planned reductions at retail value for one planning period.
- Enter the beginning inventory and the retail inventory you want to have at the end of that period.
- Include the retail value of purchase orders already committed but not yet received.
- Enter the average supplier cost as a percentage of retail value.
- Enter a proposed order at cost to see whether it fits the available purchasing budget.
How retail open-to-buy is calculated
Open-to-buy is the amount of inventory a retailer can still order for a stated period while staying on its merchandise plan. It starts with the retail inventory needed to support planned sales, reductions, and the desired ending inventory. It then subtracts inventory already on hand and purchase orders already committed for delivery in that period.
The retail calculation is:
planned purchases = planned sales + planned reductions + target ending inventory − beginning inventory
retail open-to-buy = planned purchases − committed orders
Planned reductions include markdowns, discounts, shrinkage, and similar declines in the retail value of inventory. Leaving them out can understate the purchases needed to end with the planned stock level.
Converting retail OTB to a buying budget
Merchandise plans are often held at retail, while vendors quote purchase orders at cost. The cost complement translates the retail open-to-buy into comparable wholesale dollars. If average cost is $45 for merchandise that retails for $100, the cost complement is 45%.
cost open-to-buy = retail open-to-buy × cost complement
The available purchasing budget is the positive part of cost open-to-buy. The calculator also shows any negative amount separately as overbought. For a proposed order, it subtracts the proposed cost from cost open-to-buy. A proposed order is within budget only when cost open-to-buy is positive and the order does not exceed it.
What moves the result most
Sales, planned reductions, and the ending-inventory target increase the purchase requirement dollar for dollar. Beginning inventory and committed orders reduce it dollar for dollar. The cost complement does not change the retail plan; it changes the cost-dollar translation. Use an average that fits the merchandise being planned. A blended department rate can hide a shortfall in a lower-margin category.
What this calculator leaves out
This is a merchandise-planning calculation, not a demand forecast or cash forecast. It does not include freight, duties, vendor discounts, payment terms, taxes, order minimums, lead times, or the availability of credit. It also assumes every input covers the same planning period and has the same retail valuation basis. Test category and vendor details separately when those differences affect the buying decision.
Worked example
Suppose planned net sales are $50,000, planned reductions are $3,000, target ending inventory is $40,000, and beginning inventory is $35,000. Planned purchases at retail are $50,000 + $3,000 + $40,000 − $35,000 = $58,000.
If $10,000 of orders are already committed, retail open-to-buy is $48,000. At a 45% cost complement, cost open-to-buy is $48,000 × 0.45 = $21,600. A proposed $12,000 supplier order is within budget, leaving $9,600. If committed orders had instead been $60,000, retail open-to-buy would be negative and the plan would already be overbought.
Common questions
What is open-to-buy in retail?
Open-to-buy is the inventory value a retailer can still purchase for a period without exceeding the merchandise plan. It compares expected sales, reductions, and ending inventory with stock on hand and purchase orders already committed.
What is the standard retail open-to-buy formula?
First calculate planned purchases as planned sales plus planned reductions plus target ending inventory, less beginning inventory. Then subtract committed orders not yet received. The result is retail open-to-buy, which can be multiplied by a cost complement to estimate a cost-dollar budget.
Should markdowns and shrinkage be included in open-to-buy?
Yes, if they are expected during the planning period. They reduce retail inventory value, so including planned reductions helps ensure the purchase plan still supports the desired ending inventory after those reductions occur.
How are outstanding purchase orders treated?
Orders already committed for delivery in the period reduce the amount left to buy, even if the inventory has not yet arrived. Enter their retail value so it is comparable with the retail purchase requirement and other retail inputs.
What does a negative open-to-buy result mean?
A negative result means inventory on hand plus committed orders already exceed the plan at the entered valuation. It signals an overbought position for that period, not necessarily a cash problem or a reason to cancel orders without reviewing the wider merchandise plan.
Can open-to-buy be calculated monthly or seasonally?
Yes. The formula works for any planning interval, including a month, a season, or a quarter. Sales, reductions, inventory targets, and order commitments must all use the same interval and retail basis.