THE OPEN-TO-BUY SYSTEM AND ACCURATE PERFORMANCE MEASUREMENT
The objective of this research was to assess whether the open-to-buy (OTB) system allows retail buyers to attain sales and profit objectives and thus obtain the bonuses available for budget attainment. The research used data from both Australia and New Zealand together with specific information from...
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| Published in: | International journal of retail & distribution management Vol. 20; no. 2; p. 16 |
|---|---|
| Main Author: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
Bradford
MCB UP Ltd
01-03-1992
Emerald Group Publishing, Ltd Emerald Group Publishing Limited |
| Subjects: | |
| Online Access: | Get full text |
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| Abstract | The objective of this research was to assess whether the
open-to-buy (OTB) system allows retail buyers to attain sales and profit
objectives and thus obtain the bonuses available for budget attainment.
The research used data from both Australia and New Zealand together with
specific information from a major department store. Concludes with a
recommendation that the traditional OTB system is in need of a major
review and outlines specific recommendations. |
|---|---|
| AbstractList | The objective of this research was to assess whether the open-to-buy (OTB) system allows retail buyers to attain sales and profit objectives and thus obtain the bonuses available for budget attainment. The research used data from both Australia and New Zealand together with specific information from a major department store. Concludes with a recommendation that the traditional OTB system is in need of a major review and outlines specific recommendations. The objective of this research was to assess whether the open-to-buy (OTB) system allows retail buyers to attain sales and profit objectives and thus obtain the bonuses available for budget attainment. The research used data from both Australia and New Zealand together with specific information from a major department store. Concludes with a recommendation that the traditional OTB system is in need of a major review and outlines specific recommendations. Open-to-buy (OTB) refers to the amount of inventory that a retailer can buy during a specific time period without exceeding the budgeted purchases level. The traditional OTB system is heavily dependent on the accuracy of the sales forecasts incorporated in the OTB calculation. Using a case study of one organization's OTB system, the effect of the OTB system on maximization of sales and profit outcome is examined, focusing on the key OTB variables of opening stock, purchases, and closing stock. The period examined covers 4 trading periods of 6 months each. The analysis shows that, for a department to exceed the sales budget and achieve sales results ranked in the top 20% of all departmental outcomes, OTB limits had to be overridden. The analysis also shows that successful departments clearly purchased merchandise when there was no OTB limit available, while unsuccessful departments normally remained within OTB limits. |
| Audience | Trade |
| Author | Goodwin, David R |
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| Copyright | MCB UP Limited COPYRIGHT 1992 Emerald Group Publishing, Ltd. Copyright MCB University Press Limited Mar/Apr 1992 |
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| Keywords | New Zealand Retail trade Control Purchasing Buying Australia Performance measurement |
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| PublicationTitle | International journal of retail & distribution management |
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| References | Lewison D.M. (p_4) 1986 Siegel S. (p_14) 1956 Arnold D.R. (p_7) 1983 Pasdermadjian H. (p_10) 1954 Goodwin D.R. (p_1) 1991 p_8 Australian Society of Accountants and The Institute of Chartered Accountants in Australia (p_12) 1986 Australian Society of Accountants and The Institute of Chartered Accountants in Australia (p_11) 1976 Bunton J.B. (p_2) 1982 Pashigian B.P. (p_13) 1988; 78 Marquardt R.A. (p_5) 1983 Perry L.G. (p_3) 1987; 20 Mason J.B. (p_9) 1987 Huth R.D. (p_6) 1982 |
| References_xml | – volume: 20 start-page: 58 year: 1987 ident: p_3 publication-title: Practical Accountant contributor: fullname: Perry L.G. – ident: p_8 doi: 10.1016/0361-3682(85)90032-7 – volume-title: M l year: 1987 ident: p_9 contributor: fullname: Mason J.B. – volume-title: Retail Management: A Satisfaction of Human Needs year: 1983 ident: p_5 contributor: fullname: Marquardt R.A. – volume-title: AAS 5 Statement of Accounting Standards year: 1986 ident: p_12 contributor: fullname: Australian Society of Accountants and The Institute of Chartered Accountants in Australia – volume-title: The Department Store: Its Origins Evolution, and Economics year: 1954 ident: p_10 contributor: fullname: Pasdermadjian H. – start-page: 35 year: 1982 ident: p_2 publication-title: Retail Control contributor: fullname: Bunton J.B. – volume-title: Strategic Retail Management year: 1983 ident: p_7 contributor: fullname: Arnold D.R. – volume-title: Principles and Practices year: 1986 ident: p_4 contributor: fullname: Lewison D.M. – volume: 78 start-page: 936 year: 1988 ident: p_13 publication-title: The American Economic Review contributor: fullname: Pashigian B.P. – volume-title: The Open-to-Buy System and Retail Inventory Method: The Impact on Accurate Performance Measurement year: 1991 ident: p_1 contributor: fullname: Goodwin D.R. – volume-title: Non-parametric Statistics for the Behavioral Sciences year: 1956 ident: p_14 contributor: fullname: Siegel S. – volume-title: AAS2 Statement of Accounting Standards year: 1976 ident: p_11 contributor: fullname: Australian Society of Accountants and The Institute of Chartered Accountants in Australia – start-page: 20 year: 1982 ident: p_6 publication-title: Management Focus contributor: fullname: Huth R.D. |
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| Snippet | The objective of this research was to assess whether the
open-to-buy (OTB) system allows retail buyers to attain sales and profit
objectives and thus obtain... The objective of this research was to assess whether the open‐to‐buy (OTB) system allows retail buyers to attain sales and profit objectives and thus obtain... Open-to-buy (OTB) refers to the amount of inventory that a retailer can buy during a specific time period without exceeding the budgeted purchases level. The... The objective of this research was to assess whether the open-to-buy (OTB) system allows retail buyers to attain sales and profit objectives and thus obtain... |
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| SubjectTerms | Analysis Bonuses Budgets Buyers Case studies Corporate objectives Department stores Departments Hypotheses Inventory Inventory control Marketing Merchandising Purchase orders Purchasing Retail industry Retailing industry Seasons Studies Variables |
| Title | THE OPEN-TO-BUY SYSTEM AND ACCURATE PERFORMANCE MEASUREMENT |
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