Open-to-Buy Planning for Apparel Brands

Open-to-buy is the oldest control in retail merchandising and it still works. What has changed is the pipeline underneath it. This page sits under demand forecasting for apparel brands and covers the mechanics, then the part that trips up importers: with a 90-day pipeline the buy decision lands a quarter before the receipt month.

What open-to-buy is, and what "open" actually means

Open-to-buy is the part of a period's planned receipts you have not yet spent. Every purchase order reduces it, and when it reaches zero the month is closed regardless of how good the next opportunity looks.

The word doing the work is "open". OTB is not a season budget, an inventory target or a cash plan, though it touches all three. It is a control on future receipts, held by month, and its value is that it shrinks as commitments are made. It is the retail buying budget apparel brands genuinely control — not the annual number in the board deck, but the part of it still uncommitted this month.

The open-to-buy formula, term by term

Planned receipts = planned sales + planned markdowns + planned EOM inventory − planned BOM inventory
Open-to-buy      = planned receipts − on-order commitments

• Planned sales: the demand forecast for the period, at retail value.
• Planned markdowns: the retail value you expect to give away. They belong in the formula because marked-down units leave inventory worth less than they entered it, and that erosion must be replaced to hold the plan.
• Planned EOM inventory: where you intend to end the month, and the plan's real lever. It is normally set from the following month's sales as a forward weeks-of-supply target.
• Planned BOM inventory: last month's EOM. The chain must tie or the plan is fiction.
• On-order commitments: POs already issued for receipt in that month.

The OTB formula is those two lines and nothing more, but the planned receipts formula on the first line is where the judgement sits: change the EOM target and every downstream month moves with it.

Open to buy at cost vs retail, and the landed-cost trap

Retail OTB governs assortment and inventory levels; cost OTB governs cash. They reconcile through initial markup: cost = retail x (1 − IMU%). Convert retail OTB into units at first cost and you overstate your buying power by the entire duty and freight stack.

Worked conversion, May OTB of $157,000 at retail, 68% initial markup.

That $6.08 is a fully built landed cost for a cotton knit tee at $4.30 FOB, worked line by line in landed cost for apparel imports. Duty is why the gap is so wide in 2026: under the Section 301 forced-labor tariffs effective 24 July 2026, India and Bangladesh sit in the lower tier at an additional 10% on top of the 16.5% MFN rate for cotton knit tees, roughly 26.5% all-in; Vietnam and China sit at 12.5%. The 18% India figure still circulating from the February 2026 interim framework is wrong — it rested on IEEPA authority the Supreme Court struck down thirteen days later. Verify against the current HTSUS.

A worked open-to-buy plan, February to June

Five-month OTB at retail for a DTC knitwear programme. All figures in dollars at retail. EOM in each month becomes BOM in the next, so the chain ties.

Reading April: receipts = 240,000 + 18,000 + 450,000 − 430,000 = $278,000, of which $210,000 is on order, leaving $68,000 open.

The shape of that column is typical: February is closed, March nearly so, and the money appears to sit in May and June — not because May is richer, but because you have not yet placed those orders, and on an import calendar you are already late.

How open-to-buy connects to sell-through and weeks of supply

OTB does not float free of the sell-through report. The EOM line is where they meet. Set April's EOM from May's plan: May's planned sales of $265,000 over 4.3 weeks is $61,628 a week, so an EOM of $450,000 is 7.3 weeks of forward supply. If your target cover is six weeks, April's EOM is $80,000 too high and April's planned receipts should fall by the same amount.

Sell-through works the other way. If a receipt sells through at 45% in four weeks against a plan of 32%, forward cover is collapsing, EOM lands under plan, and later months' OTB is understated. Re-plan EOM from actual sell-through monthly. Weekly OTB earns its effort only where receipts are weekly; for an import programme with four or five receipts a year per style, monthly OTB with a weekly sell-through read is the practical combination.

Open-to-buy for importers is a receipt calendar, not an order calendar

Standard OTB guidance quietly assumes a domestic wholesaler who can buy in April for May.

Work the May line backwards. A repeat knit order from India landing mid-May runs roughly 85 days from purchase order to sellable in the DC: 28 days bulk production, 7 days final inspection, 5 days to port and lading, 33 days ocean to the US East Coast, and about 9 days for customs entry, drayage and DC receiving. Mid-May minus 85 days is 19 February.

The $157,000 in the May column must therefore be committed in the third week of February. By 1 May it is not open, it is spent or forfeit — and if the colour needs a custom dye lot rather than fabric held at the mill, add roughly 40 days and the decision moves into early January.

Two consequences, both about cash. An OTB receipt calendar needs the order-by date on the same row as the receipt month — without one the table is unusable for an importer, because the actionable number is the commit date, not the month the goods appear. And cash leaves before goods land: mills take a deposit against the purchase order and the balance against shipping documents or a letter of credit, so the first outflow lands near the order date, while duty and the merchandise processing and harbor maintenance fees fall due at entry. A cost OTB showing one payment in the receipt month misdates the entire working-capital need.

What to do when OTB says stop and your dye-lot minimum says otherwise

Reorder points and lot minimums do not respect the OTB calendar. Your plan wants 660 units of a slow colour, but the mill's 400 kg dye-lot minimum makes 1,481 units the smallest runnable order, as worked through in reorder points when your lead time is 90 days. At $6.08 landed the plan budgeted $4,013 and the mill requires $9,004 — a $4,992 overage against a month that may have nothing open. Four responses, best first.

1. Split the receipt, not the dye lot. Dye the fabric once to clear the minimum, then cut and ship in two production lots landing in different months. The mill's constraint is a fabric constraint and yours is a receipt-month constraint; they can be satisfied separately, at the cost of a second shipping and entry cycle.
2. Aggregate the colour across styles so the minimum is met at programme level, which usually shrinks the overage rather than removing it: how fabric and dye-lot minimums set apparel MOQs.
3. Reallocate within the month. Cancel or defer an uncommitted fashion colour of equal cost value. This is the only response that keeps the inventory plan intact, and the one OTB exists to force.
4. Move the receipt month. Legitimate, but on an 85-day pipeline it moves the order date too, and a receipt pushed from May to June arrives after the demand that justified it.

What does not work is quietly running over. An overage on a slow colour lands as broken coverage, and inventory bought outside the plan is the inventory that gets marked down. If the size ratio on that buy is inherited rather than derived, the damage compounds: size curves and the SKU explosion. Terms above are in the Yarnstick glossary of apparel sourcing terms.

Frequently asked questions