PGA Level 2 Merchandising/Inventory Practice Exam

The OTB (Open-to-Buy) planning model is a crucial tool used by merchandisers to effectively manage inventory and budget allocation throughout a selling period. Its primary function is to help ensure that merchandisers maintain the right balance in their investments within a product line.

By providing a structure to analyze current inventory levels, sales forecasts, and budget considerations, the OTB model assists merchandisers in determining how much they should spend on new stock. This is essential to prevent situations where there may be either too much or too little investment in a particular product line, which can lead to issues such as excess inventory or missed sales opportunities.

In short, the OTB planning model is specifically designed to avoid an imbalance in investment across a product line, ensuring that merchandisers allocate resources effectively to maximize sales potential while keeping inventory manageable. This helps in maintaining a healthy inventory turnover rate and meeting consumer demand without overextending financial resources.