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MERCHANDISE PLAN BY G.HARI SHANKAR PRASAD ASSOCIATE PROFESSOR NATIONAL INSTITUTE OF FASHION TECHNOLOGY
<ul><li>PLANNING PURCHASES:  IT IS THE TERM USED TO INDICATE THE AMOUNT OF MONEY YOU CAN SPEND ON MERCHANDISE DURING A GIV...
SUPPLEMENTAL ELEMENTS:  MARK UP :  DIFFERENCE BETWEEN THE COST PRICE AND THE RETAIL PRICE OF THE MERCHANDISE.   RETAIL PRI...
<ul><li>SALES WILL BE ADEQUATE TO COVER – </li></ul><ul><li>ALL EXPENSES INCURRED IN THE OPERATION OF THE BUSINESS </li></...
CASH DISCOUNTS :  THESE ARE PERCENTAGES OR PREMIUMS ALLOWED BY MANUFACTURERS OFF THEIR INVOICES IF PAYMENT OF INVOICE IS M...
<ul><li>STOCK OVERAGE : BOOK INVENTORY LESS THAN PHYSICAL INVENTORY. </li></ul><ul><li>OPERATING EXPENSES:  TWO KINDS OF E...
<ul><li>DOLLAR MERCHANDISE PLAN:   </li></ul><ul><li>THE SIX MONTH DOLLAR MERCHANDISE PLAN IS BASED ON THE DOLLAR VALUE OF...
OPEN TO BUY:   A MAJOR TOOL USED BY RETAIL BUYERS TO CONTROL FUTURE INVENTORIES IS A DEVICE CALLED  OPEN TO BUY , WHICH MA...
OTB MAY BE CALCULATED EITHER IN DOLLARS OR IN UNITS. FOR EXAMPLE, A BUYER HAS PLANNED PURCHASES FOR THE MONTH OF AUGUST AT...
IN PRACTICE, HOWEVER, THE OPEN TO BUY FORMULA IS MORE COMPLICATED. ADJUSTMENTS ARE OFTEN NECESSARY DUE TO FLUCTUATIONS IN ...
PLANNED PURCHASES = 75,000 -- MERCHANDISE ON ORDER = 30,000 = OPEN TO BUY : 45,000 THE OPEN TO BUY FIGURE SHOWS HOW MUCH M...
THANK YOU
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Ptm10 b

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Transcript of "Ptm10 b"

  1. 1. MERCHANDISE PLAN BY G.HARI SHANKAR PRASAD ASSOCIATE PROFESSOR NATIONAL INSTITUTE OF FASHION TECHNOLOGY
  2. 2. <ul><li>PLANNING PURCHASES: IT IS THE TERM USED TO INDICATE THE AMOUNT OF MONEY YOU CAN SPEND ON MERCHANDISE DURING A GIVEN PERIOD WITHOUT EXCEEDING THE VALUE OF THE INVENTORY PLANNED TO BE ON HAND AT THE END OF THAT PERIOD </li></ul><ul><li>LARGE STORES PURCHSES ARE PALNNED ON A MONTHLY BASIS </li></ul><ul><li>SMALL STORES, ON A SEASONAL BASIS. </li></ul><ul><li>FORMULA FOR CALCULATING PLANNED PURCHASES: </li></ul><ul><li>EOM STOCK + PLANNED SALES+ PLANNED MARK DOWNS= TOTAL NEEDS OF THE MONTH </li></ul><ul><li>--- BOM STOCK = PLANNED PURCHASES </li></ul>
  3. 3. SUPPLEMENTAL ELEMENTS: MARK UP : DIFFERENCE BETWEEN THE COST PRICE AND THE RETAIL PRICE OF THE MERCHANDISE. RETAIL PRICE – COST PRICE RETAIL MARK UP % = ---------------------------------------- RETAIL PRICE RETAIL PRICE – COST PRICE COST MARK UP % = ---------------------------------------- COST PRICE INITIAL MARK UP : THE DOLLAR DIFFERENCE BETWEEN THE DELIVERED COST OF MERCHANDISE AND THE RETAIL PRICE PLACED ON IT, WHEN IT IS BROUGHT INTO STOCK IS CALLED INITIAL MARK UP. THE RETAIL STORES INITIAL MARK UP % TO ENSURE THAT THE INCOME DERIVED FROM
  4. 4. <ul><li>SALES WILL BE ADEQUATE TO COVER – </li></ul><ul><li>ALL EXPENSES INCURRED IN THE OPERATION OF THE BUSINESS </li></ul><ul><li>ANTICIPATED REDUCTION IN THE RETAIL VALUE OF THE INVENTORY, SUCH AS MARK DOWNS, EMPLOYEE DISCOUNTS. </li></ul><ul><li>A REASONABLE MARGIN OF PROFIT FOR THE STORE. </li></ul><ul><li>GROSS MARGIN: </li></ul><ul><li>= NET SALES – NET COST OF MERCHANDISE SOLD </li></ul><ul><li> GROSS MARGIN </li></ul><ul><li>% GROSS MARGIN SOLD = -------------------------- </li></ul><ul><li> NET SALES </li></ul>
  5. 5. CASH DISCOUNTS : THESE ARE PERCENTAGES OR PREMIUMS ALLOWED BY MANUFACTURERS OFF THEIR INVOICES IF PAYMENT OF INVOICE IS MADE WITHIN CERTAIN SPECIFIED PERIOD OF TIME. CASH DISCOUNTS EARNED ARE AN IMPORTANT SOURCE OF ADDITIONAL INCOME FOR A STORE OR DEPARTMENT. CASH DISCOUNTS INCREASE GROSS MARGIN, BECAUSE THEY REDUCE ACTUAL COST OF MERCHANDISE PURCHASES. TERMS OF SALE: THE COMBINATION OF ALLOWABLE DISCOUNTS ON PURCHASES AND TIME ALLOWED FOR TAKING SUCH DISCOUNTS IS REFERRED TO AS TERMS OF SALES. STOCK SHORTAGES AND OVERAGES: DOLLAR DIFFERENCE BETWEEN BOOK INVENTORY AND PHYSICAL INVENTORY. STOCK SHORTAGE : BOOK INVENTORY MORE THAN PHYSICAL INVENTORY.
  6. 6. <ul><li>STOCK OVERAGE : BOOK INVENTORY LESS THAN PHYSICAL INVENTORY. </li></ul><ul><li>OPERATING EXPENSES: TWO KINDS OF EXPENSES </li></ul><ul><li>DIRECT EXPENSES: OCCUR AS A DIRECT RESULT OF THE OPERATION OF A SPECIFIC DEPARTMENT. THESE WOULD CEASE IF DEPRTMENT IS CLOSED. </li></ul><ul><li>INDIRECT EXPENSES: THOSE THAT DO NOT DIRECTLY RESULT FROM THE OPERATION OF AN INDIVIDUAL DEPARTMENT, BUT SHARED BY ALL DEPARTMENTS OF THE STORE. </li></ul><ul><li>SIX MONTH PLAN IN MOST STORES DOES NOT INCLUDE A BUDGET FOR INDIRECT EXPENSES, BUT THEY ARE INCLUDED IN THE PLANNING OF INITIAL MARK UP. </li></ul>
  7. 7. <ul><li>DOLLAR MERCHANDISE PLAN: </li></ul><ul><li>THE SIX MONTH DOLLAR MERCHANDISE PLAN IS BASED ON THE DOLLAR VALUE OF ANTICIPATED SALES, OPTIMUM STOCK LEVELS, NECESSARY MARK DOWNS, ALLOWABLE PURCHASES. </li></ul><ul><li>DOLLAR PLAN IS AN ESSENTIAL PART OF MERCHANDISE PLANNING FOR REASONS. </li></ul><ul><li>INDICATES THE MINIMUM SALES OBJECTIVE OF THE STORE OR DEPT. </li></ul><ul><li>IT SERVES TO GUIDE MANAGEMENT IN PLANNING FOR AND CONTROLLING THE CAPITAL NEEDED FOR INVENTORY INVESTMENT THROUGHOUT THE PERIOD. </li></ul><ul><li>IT SERVES AS A GUIDE IN PLANNING PURCHASES. </li></ul><ul><li>IT PROVIDES MANAGEMENT WITH MEANS OF MEASURING THE RESULT OF MERCHANDISING EFFORTS BY ESTABLISHING SEASONAL GOAL FIGURES LIKE PLANNED S </li></ul>
  8. 8. OPEN TO BUY: A MAJOR TOOL USED BY RETAIL BUYERS TO CONTROL FUTURE INVENTORIES IS A DEVICE CALLED OPEN TO BUY , WHICH MAY BE DEFINED AS THE AMOUNT OF MERCHANDISE, EITHER AT COST PRICE OR AT RETAIL, THAT THE BUYER IS OPEN TO RECEIVE INTO INVENTORY DURING A CERTAIN TIME PERIOD BASED ON THE PLANS FORMULATED. IT MAY BE PREPARED WEEKLY OR MONTHLY AND PROVIDES A METHOD OF ALLOCATING PURCHASES SO THAT PLANNED STOCK LEVELS MAY BE MAINTAINED. IT MAY BE BROKEN DOWN ACCORDING TO A SEPARATE MERCHANDISE CATEGORIES WITHIN A DEPARTMENT.
  9. 9. OTB MAY BE CALCULATED EITHER IN DOLLARS OR IN UNITS. FOR EXAMPLE, A BUYER HAS PLANNED PURCHASES FOR THE MONTH OF AUGUST AT $ 2000. BY AUG 20, THE BUYER HAS SPENT $ 1500 FOR MERCHANDISE THAT HAS BEEN RECEIVED OR THAT WILL BE RECEIVED INTO THE DEPARTMENT BEFORE THE END OF MONTH. THIS LEAVES $ 500 FOR THE BUYER TO SPEND DURING THE REMAINING TIME. THERE FORE THE BUYER IS OPEN TO BUY $ 500 WORTH OF MERCHANDISE ON AUGUST 20. PLANNED PURCHASES = $ 2000 -- MERCHANDISE ON ORDER = $ 1500 = OPEN TO BUY = $ 500
  10. 10. IN PRACTICE, HOWEVER, THE OPEN TO BUY FORMULA IS MORE COMPLICATED. ADJUSTMENTS ARE OFTEN NECESSARY DUE TO FLUCTUATIONS IN REDUCTIONS, SALES AND AVAILABILITY OF GOODS. ALSO, MERCHANDISE ORDERED BUT NOT YET RECEIVED MAY FURTHER COMPLICATE THE OPEN TO BUY FIGURE. PLANNED SALES : 50,000 + PLANNED REDUCTIONS:10,000 +PLANNED EOM STOCK : 40, 000 -------------- TOTAL NEEDS OF THE MONTH : 100,000 -- BOM STOCK 25,000
  11. 11. PLANNED PURCHASES = 75,000 -- MERCHANDISE ON ORDER = 30,000 = OPEN TO BUY : 45,000 THE OPEN TO BUY FIGURE SHOWS HOW MUCH MERCHANDISE MAY BE RECEIVED INTO A PARTICULAR DEPARTMENT DURING THE COURSE OF A MONTH WITHOUT EXCEEDING THE PLANNED INVENTORY AT THE END OF THE MONTH.
  12. 12. THANK YOU
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