In calculating the planned OTB amount at cost, which factors are summed before BOMI is subtracted?

To determine the planned open-to-buy (OTB) amount at cost, it's essential to understand the components that contribute to the calculation. The key factors that are summed before subtracting the beginning of month inventory (BOMI) are ending inventory and projected cost of goods sold (COGS).

When calculating the planned OTB, you essentially want to know how much product you need to purchase to meet your sales expectations while keeping your inventory levels in check. Ending inventory represents the amount of stock you aim to have at the end of the period, and projected COGS reflects the total cost of goods you expect to sell during that time.

By adding these two figures together, you establish a clear picture of the total inventory levels needed to satisfy the projected sales while considering what you want to retain at the end of the period. Subtracting the beginning of month inventory then provides the necessary amount available for purchasing new inventory, thereby allowing for effective inventory management and planning.

This process highlights the importance of aligning inventory levels with sales forecasts and cost parameters, ensuring that the business can operate efficiently without overstocking or understocking.