Open-to-Buy (OTB)
Open-to-Buy (OTB) is the dollar or unit budget available to a buying team for purchasing new inventory in a given period, calculated from planned sales, inventory targets, and existing purchase commitments.
What is Open-to-Buy (OTB)?
Open-to-Buy (OTB) is the dollar or unit budget available to a buying team for purchasing new inventory in a given period. It is calculated from planned sales, planned end-of-month inventory targets, beginning-of-month inventory, and existing purchase commitments (on-order).
The standard OTB formula is:
OTB = Planned Sales + Planned EOM Inventory − BOM Inventory − On Order
A positive OTB means the team has budget available to purchase. A negative OTB means existing commitments already exceed the planned inventory position — no further buys should be made until the plan is revised or inventory is cleared.
OTB in the context of apparel planning
In apparel merchandising, OTB is the financial control layer that constrains every assortment and buy decision. Before a merchant decides which styles to carry or how many units to purchase, the OTB position defines how much capital is available to spend.
OTB is typically managed at multiple levels simultaneously:
- Total OTB — the aggregate buying budget across all categories
- Department-level OTB — budget allocated by category (tops, bottoms, outerwear, etc.)
- Channel-level OTB — budget earmarked for DTC, wholesale, or store channels separately
- Seasonal OTB — structured by season (Spring/Summer, Fall/Winter) rather than calendar month
Apparel buying cycles make OTB management particularly complex. Because purchase decisions are made 4–6 months ahead of delivery, the OTB position must account for on-order inventory that hasn't yet arrived — not just current stock.
Common OTB mistakes in apparel brands
Disconnected from assortment: When OTB lives in a separate spreadsheet from the assortment plan, buyers frequently make assortment decisions that quietly exceed the approved budget. The reconciliation step — aligning what was selected against OTB — happens manually at the end of the planning cycle, often too late to course-correct without disruption.
Stale on-order data: OTB calculations depend on accurate on-order figures. When PO confirmations, cancellations, and delivery date changes are tracked in a separate system (or not tracked at all), the on-order component of the formula is wrong — and so is every OTB number derived from it.
Planned at too high a level: Total OTB tells you whether the overall plan is financially sound. It doesn't tell you that tops are over-bought by 30% while bottoms have remaining budget. Department-level and category-level OTB management is required to catch imbalances before the buy locks.
OTB vs assortment planning
OTB and assortment planning are closely related but answer different questions:
- OTB answers: How much can we spend?
- Assortment planning answers: What should we carry within that budget?
The two processes must stay synchronized. If the assortment plan is updated but the OTB position isn't recalculated — or vice versa — teams are operating against conflicting numbers. In a connected planning system, OTB and assortment planning share a live data model so changes in one immediately reflect in the other.
In RetailNorthstar: OTB is calculated in real time as assortment and buy plan decisions are made. When a merchant adds a style to the assortment, the OTB position updates immediately — no separate reconciliation step required. Department-level and seasonal OTB are tracked alongside total OTB in the same view.