Open to Buy (OTB) Planning for Apparel Brands

Open to Buy is the apparel buyer’s purchasing budget. It is one number, expressed in cost dollars or units, that says how much new inventory the buyer can commit to for a future selling period after accounting for what is already on hand, what is already on order, and what the brand expects to sell.

The formula is straightforward. The execution is where most apparel brands lose control of it.

What Open to Buy actually is

OTB is a planning constraint, not a purchasing tool. It tells the buyer the maximum dollar value of new purchase orders that can be issued for a given period without overcommitting working capital or pushing end-of-period inventory above target.

The four inputs:

Input	What it represents	Where the data lives
Planned sales	Forecast cost of goods sold for the period	Sales plan or merchandising plan
Planned ending inventory	Target inventory at period end (cost basis)	Inventory plan, expressed as weeks of supply or stock-to-sales ratio
Inventory on hand	Current stock value at cost	Inventory system
On-order POs	Cost of POs issued but not yet received	Purchase order system

The formula:

OTB = (Planned ending inventory + Planned sales) - (Inventory on hand + On-order POs)

If the result is positive, the buyer has remaining budget to issue new POs. If it is negative, the buyer is overcommitted and either has to cancel POs, defer planned receipts, or accept that ending inventory will overshoot target.

Why apparel brands need OTB more than other retail categories

Apparel inventory has properties that make budget control unforgiving:

• Lead times are long. A wholesale buy committed in February for a Fall season delivers in July. Six months of capital is locked the moment the PO is issued.
• Markdowns are non-recoverable. Apparel that does not sell at full price clears at 30 to 50 percent off, then 50 to 70 percent off. Overbought inventory is not just slow money; it is permanently degraded margin.
• SKU counts are high. Hundreds or thousands of styles per season, each with size and color variants, each with its own buy decision.
• Demand is seasonal. Selling windows are narrow. Inventory still on hand at the end of the season has to be cleared before the next season’s stock arrives.

OTB exists because the cost of being wrong about a buy is high and irreversible. A grocery retailer that overbuys can return product or sell it next week. An apparel brand that overbuys is selling that overstock at 60 percent off in eight months.

What OTB looks like in practice

A simple seasonal example for a women’s tops category:

Line	Value	Notes
Planned sales (cost)	$400,000	Based on prior season + growth assumption
Planned ending inventory (cost)	$150,000	Target 6 weeks of supply at season end
Beginning inventory (cost)	$120,000	Carryover from prior season
On-order POs (cost)	$200,000	POs issued but not yet received
OTB remaining	$230,000	(150,000 + 400,000) - (120,000 + 200,000)

The buyer has $230,000 of remaining budget for additional commitments in the women’s tops category. That figure changes every week as inventory receives, sales post, and new POs get issued.

Why OTB breaks for most apparel brands

The math is high-school arithmetic. The four inputs are not.

Inventory on hand is wrong. Most apparel brands run inventory in two or three systems: a 3PL system for warehouse stock, a Shopify or marketplace system for channel-allocated stock, and an ERP or spreadsheet for the consolidated view. The three systems sync on different cadences. OTB calculated from the spreadsheet view is reading inventory that was current 24 to 72 hours ago, not now.

On-order POs are wrong. POs get cancelled, quantities get revised, deliveries get split. If the PO system does not propagate those changes to the OTB worksheet, the buyer is calculating OTB against a phantom commitment that was reduced last week.

Planned sales are wrong. Forecasts get set in the planning cycle and then not refreshed. Three weeks into the season, actual sell-through is +20 percent or -15 percent against plan, but OTB is still computed against the original number. The buyer either sits on budget that should be spent (reorders not placed, stockouts incoming) or commits budget that the season will not consume.

Planned ending inventory is wrong. The end-of-period target was set as “6 weeks of supply” at planning time, but actual sell-through has shifted. Six weeks at the new run rate is a different dollar number than six weeks at the planned run rate.

The result is OTB that looks rigorous on the spreadsheet and is materially wrong in execution. Brands discover this at receipt time, when actual landed inventory is 15 to 25 percent off the planned level.

The four-number reconciliation problem

Every OTB calculation reduces to four numbers that have to agree across systems:

1. What is in the warehouse right now (cost basis)
2. What is on order from factories right now (cost basis, post any revisions)
3. What sales have actually been (cost basis, current week)
4. What sales are still expected (forecast, refreshed against actuals)

Brands running these four numbers across separate inventory, PO, and reporting systems spend the first day of every weekly OTB review reconciling the data, not making buying decisions. The reconciliation work is the constraint, not the analysis. This is one of the operational signals of Breakpoint 3 (inventory truth) in the 6 Breakpoints framework: when the planner does not trust any single number, the planning cycle stalls.

The structural fix is consolidating inventory, PO, and sales data on one platform so OTB reads the same numbers across teams. The math does not get easier; the inputs get reliable.

OTB by channel

Most apparel brands now sell across at least two channels: wholesale and DTC. Each channel has its own buying rhythm, and OTB has to be set per channel.

Channel	OTB rhythm	Planning horizon	Lead time
Wholesale	Twice a year (Spring, Fall)	6 months out	4 to 6 months from PO to receipt
DTC ecommerce	Monthly rolling	8 to 12 weeks out	6 to 12 weeks from PO to receipt
Marketplace	Monthly rolling, often replenishment-driven	4 to 8 weeks out	Variable
Physical retail	Quarterly	3 months out	Same as DTC

A brand running OTB only at the consolidated level masks channel-specific overcommit. A wholesale buy can show within consolidated OTB while DTC is overbought relative to its own forecast. Channel-level OTB is the corrective.

The seasonal rhythm OTB has to support

For wholesale-led apparel brands, the OTB cycle aligns with the buying calendar:

1. Pre-season planning (6 to 9 months out): set category OTB based on prior year + growth + assortment plan.
2. Buy week (4 to 6 months out): issue POs against the OTB cap. OTB drops to remaining budget.
3. Reorder window (during selling season): refresh planned sales weekly, recompute remaining OTB, place reorder POs against fast-sellers.
4. Markdown and EOL planning (last 4 to 6 weeks of season): wind down OTB to zero, plan markdown depth on remaining inventory.
5. Carryover (between seasons): residual inventory carries into next-period beginning inventory and reduces next-period OTB.

DTC brands run a compressed version of this cycle every month, with shorter horizons and more frequent refreshes.

What OTB does not solve

OTB is a budget tool. It cannot tell the buyer:

• Which styles to buy. OTB sets the dollar cap; assortment planning chooses what fills it.
• Which sizes and colors to buy. Size and color planning is downstream of style planning, which is downstream of category OTB.
• Where the inventory should sit. Allocation across warehouses and channels is a separate workflow.
• When to reorder. Reorder timing is a function of selling velocity, supplier lead time, and remaining selling window, not OTB.

A brand that treats OTB as the only inventory planning tool tends to hit the dollar target while missing on assortment depth, size curve, or channel allocation. OTB is one of four to six interconnected planning workflows, not a complete plan.

What this looks like in an apparel platform

A unified apparel platform handles OTB inputs by keeping the four numbers always live and always reconciled:

• Inventory on hand comes directly from the inventory module, including stock in transit, allocated stock, and stock on hold. One number, refreshed in real time.
• On-order POs comes from the production and purchase management modules, automatically reflecting cancellations, revisions, and partial receipts.
• Planned sales can be loaded from the sales plan and refreshed weekly against actuals from the sales channels.
• Planned ending inventory is computed from the chosen weeks-of-supply or stock-to-sales target against the rolling forecast.

The buyer sees current OTB by category, by channel, and by season without a Monday morning data reconciliation. Reorder decisions get made against numbers everyone trusts.

How to start using OTB if you are not already

For brands moving off spreadsheet OTB:

1. Define the categories. Most brands need 8 to 25 OTB categories, not 200. Department, class, or sub-class is the typical level.
2. Set baseline planned sales by category using the prior comparable season plus growth assumption plus assortment shifts.
3. Set ending inventory targets as weeks of supply (4 to 8 weeks for fast-moving categories, 8 to 16 for slower).
4. Lock the data sources before the first OTB calc: which system holds inventory, which holds POs, how often they refresh, who owns the reconciliation.
5. Run OTB weekly during the active selling period. Refresh planned sales every two to four weeks based on actual sell-through.
6. Track OTB variance quarterly. If actual ending inventory is consistently 15 percent or more off plan, the inputs are unreliable, not the framework.

Brands that get OTB right are not running smarter math. They are running the same four inputs against reliable data, refreshed often enough that the buyer can trust the number when the PO commitment is made.

Related reading

• Inventory management for apparel brands
• Garment costing and pricing
• Purchase order management
• Wholesale inventory management
• The 6 Breakpoints framework: inventory truth