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The Six Month Plan
Terms in this set (17)
What is The Six Month Merchandising Financial Plan and why is it important?
Is a plan that specifically defines a retailer's financial goals in terms of Sales, GM % and $, BOM Inventory, Markdowns, and the Open-to-Buy. It is essentially the roadmap for the business. It is important because it allows the business to plan their gross margin dollars which allow's them to project their expenses. Once these two calculations are made then the business can calculate their expected Net Profit.
Key Financial Elements
GM $ & %
OTB or Receipts
The Process of a plan
1. Analyze current year by month: sales, GM, BOM Inventory, MD% and $, OTB
2. Obtain goals from DMM for next year
3. Construct plan w/ Planners
4. Review final plan w/ DMM approval
Weeks of Supply formula
= 26 weeks/ Turnover Rate
5 week months
March and June
Sept and Dec
Weeks of Supply
how long it takes something to sell
How many times per week in $ and units inventory is sold
Stock to Sales Ratio formula
= BOM Inventory/ Sales (for month)
Stock to Sales Ratio
used to evaluate and plan inventory
Markdown Plan: Analyze this year
Actual MD's vs. Plan
When most MD's taken
Why MD's taken
Markdown Plan: Plan next year
Review calendar changes
Plot MD $'s /month
Ensure Totals match DMM plan
Receipt Plan - OTB
Analyze this year:
What was the monthly receipt flow?
Plan next year:
What is a realistic receipt flow?
Assortment Plan Steps
1. Take Avg Inv. level for each class
2. Determine Avg. Retail Price for each class
3. Convert $'s into Units
4. Determine Types
Average Inventory =
average amount of stock for each month.
Average Inventory Level for Each Classification is detailed in
the Six Month Plan.
Average stock units =
Average Stock $/ Avg Price
$48,000/$80 = 600 units
If you want 1 of each size, or in stock 10 sizes per style
600 units/10 sizes per style = 60 styles
If you want 2 of each size in stock:
600 unites/20 per style (2 of each of 10 sizes) = 30 styles
1. Complete the six-month merchandise financial plan by classification.
2. Determine avg stock/classification.
3. Determine the avg price point/classification
4. Calculate # of units that make up the assortment/classification.
5. Calculate # of model numbers/classification.
6. Decide # of colors, sizes, and types of models or styles/classification.
7. Decide the % of basic, key, and test models or styles/classification.
8. Refer to the financial plan and the model stock assortment plan before selecting products for the store.
9. Monitor current business conditions and trends when deciding types of models to buy and at what price points.
10. Constantly respond to current business conditions or changing trends and revise the financial plan and assortment plan as necessary. Meet with the DMM to discuss recommended changes in strategy.
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