Studied by 9 people
Why do buyers use forecast?
To predict what will happen in the future and what a consumer will do under certain conditions.
Why do most buyers start gathering info before they start making a forecast?
Requires them to think in detailed terms about (1) target market groups the store is trying to serve (2) existing and potential competitors (3)future trends occurring in the market and the economy
How long is a typical buying plan?
six months
What is long-term forecasting?
a forecast that extends more than a year
When a buyer is preparing a forecast what are the things the buyer should consider?
target market groups the store is trying to serve, existing and potential customers, and future trends occurring in the market and the economy
What is the first step in a sales forecast?
Review past sales
What is the stock-to-sales ratio method?
Involves maintaining inventory at a specific ratio to sales
What is a stock turnover?
How accurately you balance sales to inventory levels (how fast merch is sold, replenished, and sold)
How do we figure out planned BOM stock levels?
The stock-to-sales ratio indicates the relationship between planned sales and the amount of inventory required to support those sales and is used to calculate this...
What is the formula for calculating stock turnover?
Stock turnover rate=Sales/Average stock
What is a merchandising plan?
A projection in dollars of the sales goals of the store or department over a specified period of time - usually 6 months but may be for shorter periods.
What is top-down planning?
Involves top-level management estimating total sales for the upcoming period
What is the purpose of the merchandise plan?
Minimize the use of capital and maximize profits.
What is "planned net sales"?
Represents gross sales minus customer returns and allowances.
What is the difference between BOM and EOM?
BOM is beginning of month, EOM is end. BOM must be the value of the EOM for the preceding period.
How do we figure out planned purchases at cost? At retail?
Planned purchases at retail= Planned sales + planned reductions + Planned EOM-Planned BOM
Planned purchases at cost= Planned purchases at retail x (100%-Initial Markup%)
What are retail reductions?
The total of planned markdowns, shortages, and employee discounts
What is open to buy?
The dollar amount that the buyer has left to spend for a period
What is the EOM for one month? BOM for next?
EOM is the planned BOM stock for the following month
What is the formula for planned purchases?
Planned Purchases= Planned Sales + Planned EOM + Planned reductions - Planned BOM
What is broad and shallow?
Refers to offering a wide selection of brands with little depth.
What is narrow and deep?
Refers to stocking large amounts of a few product categories or brands.
What is assortment planning?
Involves determining the specific quantities and characteristics of each product being purchased, in relation to specific factors such as brands, color and sizes
Note 
Flashcard (63)