What is planning of open to buy in SAP IS-R - SAP for Retail?

SAP Term: planning of open to buy

• Component: IS-R

• Component Name: SAP for Retail

• Description: Retail Method used in Retailing in procuring goods for planning stock and revenue levels. The target stock on hand is calculated for a planning period days, weeks, months, years, based on the planned sales volumes for that period. The target stock on-hand, valuated at delivered price, is used to calculate the purchasing budget for the planning period. Due to large differences in inventory turnover rates, the calculation can be carried out separately for individual materials. You can also group together materials with the same inventory turnover rate.

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• Key Concepts: 
  Planning of Open to Buy (OTB) is a process used in SAP for Retail to plan the amount of merchandise that should be purchased for a given period of time. It is based on the sales forecast and inventory levels, and helps retailers to determine the optimal amount of merchandise to purchase in order to meet customer demand. 
  
  How to use it: 
  In SAP for Retail, the OTB process is used to plan the amount of merchandise that should be purchased for a given period of time. The process begins with a sales forecast, which is used to determine the expected demand for a particular product or product category. This forecast is then compared to the current inventory levels, and the difference between the two is used to calculate the amount of merchandise that should be purchased. 
  
  Tips & Tricks: 
  When using the OTB process in SAP for Retail, it is important to consider factors such as seasonality, promotional activities, and customer preferences when creating the sales forecast. Additionally, it is important to ensure that the inventory levels are accurate and up-to-date in order to ensure that the OTB process produces accurate results. 
  
  Related Information: 
  The OTB process can be used in conjunction with other processes such as replenishment planning and inventory optimization in order to ensure that retailers have an optimal level of inventory at all times. Additionally, it can be used in conjunction with other SAP for Retail modules such as pricing and promotions in order to maximize profits.