Chapter 3 Buying Practices

Buying Practices

WHAT YOU W ILL LEARN

§ How to determine the number of product styles to

purchase in each merchandise category.

§ How to design your own “Assortment Planning”

forms.

§ How to negotiate better terms with your suppliers.

§ How to rate your suppliers against various

performance criteria.

§ How to correct over-stock situations.

§ Advantages and disadvantages of operating a

central warehouse.

“Great
locations,
great looking For those on the retail front lines, the position of “buyer”
stores & great is one that holds elite status. They believe buyers are
sales staff constantly being wined and dined by suppliers, and
aren’t worth traveling to glamorous places hunting for captivating
much if the merchandise.
merchandise
isn’t right. ” While there may be a position or two like this
somewhere in the world, most of today's buyers are

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Chapter 3 Buying Practices

somewhere in the world, most of today's buyers are

slaves to the computer and the telephone. They are
constantly monitoring sales performance, reworking
projections for the umpteenth time, and tracking down
late deliveries for an upcoming promotion.

Buying is, however, what retail is all about. Great

locations, great looking stores and great sales staff
aren’t worth much if the merchandise isn’t right.

ASSORTMENT PLAN

After the six-month merchandise plan has been

completed and approved by management, the next
step is to determine how many styles will be required in
each merchandise classification to maintain a
balanced stock throughout the selling period. For
example, a fashion retailer will want to formulate a plan
outlining the breadth, depth and proper mix of sizes,
colours and price points of merchandise to be carried,
right down to the subclass level.

Breadth and Depth Analysis

ü Tip The term breadth in assortment planning refers to the

The higher the number of subclasses within a product classification. In
perceived the example of our family shoe store, athletic footwear
quality of is a classification of the men's shoe department. The
merchandise buyer’s decision is how many different subclasses of
carried, the men's athletic footwear should be purchased? The
lower the subclasses he carried last season were tennis, jogging,
“depth” of basketball, cross training, golf and hiking.
each style/
product
The buying options are to carry all of the subclasses with
required.
a minimum number of styles in each one (breadth), or
to drop the weaker subclasses and use those dollars to
carry more styles in the remaining subclasses (depth).

Carrying too narrow a range may limit customer

appeal. Conversely, when breadth is too great we risk

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appeal. Conversely, when breadth is too great we risk

not displaying enough depth/selection in each
subclass, thus resulting in lost sales.

With a limited number of dollars to spend, the buyer

can only purchase so much merchandise. A review of
last season's sales results and an understanding of
market trends should help with this decision-making
process.

Size and Colour Analysis

In the case of our family shoe store, sizing is extremely
important. Each style of shoe can come in up to 15
different sizes. If we do not have a customer's size in the
requested style, there is a good chance we will lose a
sale. Ordering the correct depth in each size is critical.
Therefore, knowing what sizes are most and least
popular will help with decisions here.

Colour decisions can be equally important. The astute

buyer follows colour trends and knows which ones will
appeal to his customer. This season’s hot colour could
be next year's dog.

Price Point Analysis

Price resistance by customers in the last few years has
forced retailers to perform price point analyses with
greater detail and frequency. In this process, the buyer
ü Tip must first determine which “magic” price in each
Having price
merchandise classification will produce the maximum
points on e ither
side of a mid- number of sales. This price point is where the volume of
range price can his purchases should be made.
enhance this
middle price as To complete the assortment plan, additional price
the “volume” points will have to be considered. A common strategy
price point. is to have price points higher and lower than the
estimated "volume point". This gives the classification a
broader appeal, with something for customers wanting
a perceived higher value product and a selection for
those on a tighter budget.

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Chapter 3 Buying Practices

those on a tighter budget.

Having a price point on either side of a mid-range price

can enhance this middle price as the volume point by
directing the majority of the sales towards it. Human
nature being what it is, we usually believe that the
middle-of-the-road price is the prudent purchase. Not
the most expensive, yet not the cheapest.

A review of last season's sales data and an

understanding of your customer's price resistance levels
will help you make the right price point decisions.

The sample Merchandise Assortment Plan on the

following page provides you with a basic format. It
offers the simplest approach, and does not include key
elements such as price point, size or colour. To include
these elements, you must create a multi-layered
Assortment Plan.

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 Chapter 3 Buying Practices

Merchandise Assortment Plan

Season: ____F2_______ Class: _Sweaters

Department: _Men’s Wear Sub Class: V-Necks

Vendor Style # Units Cost Retail Planned Purchases Total

Aug. Sept. Oct. Nov. Dec. Jan.

ABC #1751 28 $25 $55 $1200 $1200 $2400

Co.
#1611 12 $40 $90 $1080 $1080
#4519 36 $32 $65 $2340 $2340

XYZ #D340 24 $45 $100 $1200 $1200 $2400

Co.
#D424 12 $70 $150 $1800 $1800

TOTAL 112 $2280 $2400 $5340 $10020

Monthly Open-to-Buy – Sweaters/V-necks

Aug. Sept. Oct. Nov. Dec. Jan. Total
$10000 $5000 $10000 $5000 $30,000

Note: In the above Assortment Plan, you can see the open-to-buy figures
that were calculated before starting the process. The layout of your form
will have to be altered to reflect the type of retail operation you are
running and the level of detail you require (e.g. Do you want to include
size & colour?).

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Chapter 3 Buying Practices

VENDOR A NALYSIS
A proper vendor analysis shows buyers where they get
the most for their money. Both quantitative and
qualitative factors are considered during this
evaluation. Your business will benefit greatly from a
close review of competing vendors using the following
criteria:

1) Gross Margin Contribution

When all is said and done and the season is over, which
of the 12 suppliers in our woman's dress shoe
department gave us the best return on investment?
Take into consideration the total gross profit generated
for each supplier versus the number of dollars spent on
purchases. Factors affecting this ratio are initial markup
and total markdowns.

ü Tip 2) Customer Acceptance Level

Suppliers will
sometimes High-demand fashion and fad items may be exclusive
ticket to a single supplier and result in a negotiate-at-any-cost
merchandise for scenario. Past sales figures, store level input and the
you and hold it customers themselves can give valuable insight as to
in their specific product demand level, thereby influencing
warehouse until vendor ranking by the retailer.
required.

3) Adherence To Company Policy

A vendor who does not comply with pur chase order

instructions can lose merit in the eyes of a buyer. Why?
Late shipments, lack of adherence to cancellation
dates, and improper packaging, labeling and ticketing
of products will cost you money!

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4) Merchandise Quality

What is the supplier's past history with regard to

customer returns due to quality problems? How does
their apparel "fit" in terms of sizing? Does the styling
flatter the majority of our customers' body shapes? A
vendor’s ability to deliver a consistent level of
excellence is worth a lot to most retailers.

NOTE: Through aggressive negotiating skills, the astute buyer can

enhance his gross margin during discussions with vendors. Use the
following Vendor Analysis form to assist you in comparing suppliers of
similar products.

Vendor Analysis

Store: Department: Period:

Net Total % Ending Co-Op Markdown Remarks/

Vendor Discounts
Sales Purchases Ship Margin Advertising Allowance Rating

ABC Co. $85000 $51000 98 37.2% 5% 5% 0 C

XYZ Co. 110000 57000 94 46.1 0 0 0 A

CBA Co. 56000 30000 100 42.7 3% 3% 4% B

ZYX Co. 121000 73000 89 39.1 6% 5% 0 B

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Chapter 3 Buying Practices

VENDOR NEGOTIATIONS
There are numerous negotiating points to be resolved
during purchase discussions with suppliers. The following
are some of the areas that a typical retailer may
consider:

1) Trade Discounts

Sometimes referred to as volume discounts or booking

discounts, these are reductions, or a series of reductions,
from the total value of the purchase order. Certain
requirements are sometimes tied to these discounts.
These may include such things as minimum purchase
volumes, or deadlines for order placement or delivery.

More often, these trade discounts are tied to a specific

payment schedule. For example, a certain level of
discount may be applied only if the invoice is paid
within usual terms, such as 30 or 60 days from invoice
date.
ü Tip
Suppliers treat
customers that 2) Cash Discounts
pay on time far
better than Suppliers like to get their money as soon as possible, and
ones who have often allow discounts for prompt payment. A common
to be reminded payment term of 2/10 net 30 means a 2% discount can
of their past due be deducted if payment is made within 10 days of the
amounts.
invoice date. If no discount is taken, the full invoice
balance is due within 30 days.

Not taking advantage of this discount is equivalent to

paying the supplier an interest rate of 2% over 20 days,
which equals a 36% effective annual interest rate.

2% X 360 days per year = 36% effective annual interest

20 days

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Chapter 3 Buying Practices

Remember, “cash is king" when it comes to getting the

best price. Cash up front or cash on delivery (C.O.D.)
are extra-powerful incentives for vendors to sharpen
their pencils and offer even further discounts.

3) Dating
This is where the date for final payment of the invoice is
determined. Having an extended period of time before
payment is due will not affect t he gross margin, but it
does have cash flow and interest-saving consequences
for the company.

In return for this benefit, suppliers impose penalties for

not making payments when due. A common byline on
purchase contracts and invoices states that a 1.5% rate
of interest per month will be charged on all overdue
accounts.

4) Markdown Allowances
If the retailer does not attain what he feels is an
appropriate sell-through percentage on a particular
item by a certain date, the supplier may agree to a
cash r ebate. This is considered compensation for lost
margin, because markdowns are needed to clear
remaining stock.

Other variations of allowances are the guaranteed sale

and the consignment agreement. In the guaranteed
sale, the vendor agrees to take back any unsold
merchandise. Under a consignment arrangement, the
vendor retains ownership of goods and the retailer pays
only for product sold.

These allowances are difficult to negotiate, but not

impossible. New suppliers trying to break into a market
can sometimes be pushed into such arrangements. As
well, mid-season purchases are sometimes treated in a
more favourable light.

ü Tip 5) Co-op Advertising

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Chapter 3 Buying Practices

Suppliers
always have This refers to a vendor’s rebate program often available
extra co-op to retailers to help promote their product. Most
advertising $ suppliers have written guidelines as to the type of
available for advertisements and the percentage of yearly
professional, purchases that are eligible for the co-op program.
targeted
promotional At the beginning of each season, suppliers usually
develop a budget for their co-op program. Many
ideas.
times, this budget is not completely spent, so retailers
with a strong promotional idea can negotiate
additional funds above and beyond the standard
rebate.

Another common negotiating objective is to have the

co-op rebate dropped or rolled into a larger volume
discount, which is deducted off the face of each
invoice.

ü Tip
You need not 6) Private Label Programs
be a large
chain to have Occasionally, part of a retailer's total strategy is to
a private label develop an in-house private label program. This is
program. where the retailer puts his own name on a product to
There are identify it as being manufactured by, or exclusively for,
manufacturers his store. Sometimes, this option can be negotiated at
that will do no extra cost (assuming the supplier has the capability
small runs on to label goods in such a manner).
special
products.

7) Freight Terms

Another opportunity for the buyer to save money is in

negotiating responsibility for freight costs and the point
at which ownership transfers from supplier to retailer.
F.O.B., or "free on board", indicates where the retailer
takes ownership of the goods and becomes responsible
for their shipment.

If the F.O.B. destination is somewhere other than the

retailer’s address, it means that ownership is transferred
at that location and the retailer is responsible for paying
freight costs from that point forward. If there are

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freight costs from that point forward. If there are

problems with the shipment after that point, the onus is
on the retailer to file a claim against the shipper.

"FOB destination", on the other hand, means that the

vendor owns the goods until they reach the retailer's
door and pays for all shipping costs.

THE OPEN-TO-BUY S YSTEM

The “open-to-buy” (OTB) system represents the buyer’s
best control mechanism for adjusting inventories due to
changes in actual sales from the original plan. Usually
calculated on a month -by- month basis, this OTB
ü Tip number must be accurate and timely in order to
maximize profits (if sales are higher than planned) or to
“Open-to-sort”
can be minimize markdowns (if sales are less than projected). In
another line extreme cases, cash flow crises may arise if inventories
are not scaled back when sales are soft.
on your OTB
that allocates
The “Purchases ” figure from the six-month merchandise
$ for fill-ins and
plan is all OTB until an order is written. Each order then
opportunity
decreases the OTB account for the particular month in
buys.
which deliv ery of stock is expected.

Depending on company policy, buyers will not spend all

of their OTB for each month. Common practice is to
leave dollars available for opportunity purchases and to
act as a buffer if sales do not reach plan.

The actual amount of the OTB account left in reserve

will vary from month to month. A common practice is
to retain a higher percentage of OTB dollars in the latter
months of a season. The reason for this is that we want
all possible chances to meet and exceed sales
projections, so inventory selection has to be at its best
early on in the season. In the event that sales become
weak in the early months of the season, we have the
option of making adjustments if sufficient OTB dollars
remain unspent in the later months.
ü Tip
If you cannot fit Depending on the type of retail concept (i.e. high
in a great fashion), stock fill-ins during the season may not be an
opportunity buy option because all goods are manufactured to order

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Chapter 3 Buying Practices

opportunity buy option because all goods are manufactured to order

that is offered to and inventory requirements must be 100% booked. In
you, try for this scenario, OTB is not a factor and therefore initial
extended purchases have to be well -planned.
“dating” so
cash flow is not
affected.
To maintain an open-to-buy reporting system, the
following information is needed for each month of the
season:

• Planned sales projections.

• Actual sales.
• Planned end of month inventory.
• Actual end of month inventory.
• Planned markdowns.
• Actual markdowns.
• Outstanding purchase orders.

The formula for calculating monthly OTB is as follows:

OTB = Planned EOM Inv.

+ Planned sales
+ Planned Markdowns
- Outstanding orders
- Planned BOM Inventory

From the sample open-to-buy form shown below, we can

calculate the OTB for August as follows:

OTB August = $110,000 + $35,000 + $2,800 - $70,000 -

$50,000

= $27,800

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PLANNED OPEN-TO-BUY
Department: Class: Season: Date:
MONTHS Season
Aug. Sept. Oct. Nov. Dec. Jan. Total

B.O.M. Planned $50,000 $110,000 $140,000 $150,000 $170,000 $140,000

Inventory Actual

Sales Planned $35,000 $55,000 $40,000 $45,000 $85,000 $50,000 $310,000

Actual
Markdowns Planned $2,800 $4,400 $3,200 $3,600 $6,800 $14,000 $34,800
Actual
Outstanding $70,000 $61,300 $29,600 $48,900 $45,500 $0 $253,400
Orders

E.O.M. Planned $110,000 $140,000 $150,000 $178,000 $140,000 $90,000

Inventory Actual

Open-to-Buy $27,800 $28,100 $23,600 $21,600 $16,300 $14,000 $131,400

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Chapter 3 Buying Practices

Stock replenishment is affected by the following factors:

ü Fact 1) Predicted Rate Of Sales

Computerized
retailers have a How fast a particular item is selling and predictions for
far better this rate to increase, decrease or remain the same.
chance of
forecasting &
attaining higher
2) Frequency Of Information
year-end
margins than How often are we getting information from sold records
stores operated and in-stock lists from the stores? Compared to manual
on manual systems, the advantage of computerization and the
systems. daily information it provides is tremendous.

3) Lead Time For An Order

How fast can an order be processed in-house, sent to

the supplier and received back in stores?

4) Customer Service Level

How many times out of ten is it acceptable to tell a
customer "Sorry, we’re out of stock”? This is a
management decision about the level of service your
store is trying to provide for the customer.

ü Tip
In many cases, MERCHANDISE M OVEMENT D ECISIONS
it is more cost-
effective to Besides OTB, there are other means of controlling
mark down an merchandise levels. Inter-store transfers, markdowns
item than and returns to vendors all require additional store level
transfer it to information in order for buyers to make informed
another store. decisions. A review of sold records, in-stock lists, and
fast/slow sell reports can assist you in this area.

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1) Inter-Store Transfers

Always a tough call, inter-store transfers are quite

expensive, and not just because of the added freight
and labour involved. New sales also suffer, as store staff
become focused on shipping and receiving transfers
rather than serving other customers. Another concern is
the effect of transfers on low volume stores that are
already struggling to make sales. Will robbing them of
stock weaken their sales performance even more?

2) Markdowns

Sometimes factors beyond your control will result in

additional unplanned reductions in the selling price
(e.g. weather conditions, poorly constructed
merchandise, late deliveries, mismates). More often,
however, additional markdowns will be required due to
controllable situations, such as:

• Unreasonably high initial markup.

• Not taking markdowns soon enough.
• Not making the first markdown large enough.
• Overestimating customer demand.
• Carrying too many styles in a class or assortment.
• Not moving stock from the warehouse or stock
room.

ü Tip 3) Returns to Vendors

You will have
Depending on your relationship with the supplier, a
fewer
problems return to vendor should be considered as an alternative
getting credit to a deep markdown. This is difficult to negotiate, but
not impossible, especially if it’s early in the season and
on returned
merchandise if the vendor has a chance to re-sell the product.
you attach a
However, if this kind of return is not isolated to your store
“return tag” to
and the supplier is facing customer rejection from a
each product
number of outlets, then returns will be unlikely.
outlining the
Restocking charges are not uncommon as a means to
problem,
defray the vendor’s cost of handling.

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Chapter 3 Buying Practices

customer defray the vendor’s cost of handling.

name, etc.

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Chapter 3 Buying Practices

CENTRAL W AREHOUSING: ADVANTAGES

From a stock management perspective, maintaining a
central warehouse can offer numerous savings over
keeping inventory at the store level:

1) Reduced Inventory Levels: Stores carry less back-up

stock if a central distribution center can respond to
store demands quickly and efficiently.

2) Minimize Out-of-Stock: If sufficient back-up stock is

centrally located and available for distribution on
demand, then missed sales resulting from out-of-
stock situations can be minimized at all stores.

3) Better Controls: Warehouse staff are hired for their

shipping and receiving skills, while store personnel
have stronger sales and service skills. Therefore,
accuracy and efficiency in moving and maintaining
inventory is much higher at the warehouse level.

4) Reduced Inter-Store Transfers: Keeping store

inventories at a minimum level and replenishing
them on a “as sold” basis allows you to reduce
overstock situations requiring inter-store transfers.

5) Freight Benefits: Suppliers can ship merchandise

more quickly and cheaply if it’s going to one
location instead of many.

CENTRAL W AREHOUSING: DISADVANTAGES

The biggest disadvantage of maintaining a central
“You can’t sell warehouse is that without strong buying discipline it’s
it in the easier to get yourself into an overstock situation.
warehouse.”
When you operate on a “distribution center” (DC) basis
(i.e. without a central warehouse), goods that come
into the center have been purchased for a particular
store and are rerouted immediately. There is no back-
up stock held in a DC. The buyer is also held in check
by the physical size of his stores and their stock carrying

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Chapter 3 Buying Practices

by the physical size of his stores and their stock carrying

capabilities.

Under a warehouse scenario where storage space is

not a concern, buyers often rationalize “good”
purchases instead of focussing on stock turns. There is
also a tendency to resist taking deep enough
markdowns at end of season. As a result, unsold
merchandise is shipped back to the warehouse from
the stores in order to make room for the new season’s
buy.

SUMMARY
Mastering the art of assortment planning, vendor
analysis, negotiation strategy and the “open-to-buy”
process will make you a “super” retailer.

Remember these important points:

1) Don’t let your warehouse get you in trouble by

hiding merchandise that should be in the stores.

2) There are other important issues to negotiate with

your suppliers besides price. Try to get longer
payment terms, co-op advertising dollars and
markdown allowances.

3) The middle price point of your assortment plan is

usually where you will find the highest sales.

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Chapter 3 Buying Practices

4) Never book 100% of your inventory requirements.

You need a buffer to make adjustments if sales are
soft and to take advantage of “opportunity buys”
that usually become available in mid-season.

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Case Stud y Buying Practices

CASE STUDY: BUYING P RACTICES

Now let’s get back to the challenges at Jackson’s Department Store. In

this segment, you will focus on building an assortment plan for the men’s
wear department and managing inventories using an “open-to-buy”
system.

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Case Stud y Buying Practices

CHAPTER 3: BUYING PRACTICES

After completing Susan’s “merchandise plan” for the men’s wear department,
Bill and Steve thought they were ready to go to market. However, breaking
one’s “buy” into dollar figures for each department and class proved more
planning than they had ever expected. Now Susan wanted them to complete
an “assortment plan” for each subclass of merchandise. This plan includes
breadth & depth consideration; size & colour planning and price points. Based
on these considerations, how many price points would they need for each
subclass of product?

Without any computer files of Jackson’s historical information, Bill and Steve used
their “gut instincts” to decipher what old and new customers might want. But
you need to remind them this is only a “plan”. What they see in the marketplace
will inevitably change their perspective and their choices.

Susan used major class "sweaters" to outline the steps in an assortment plan.
Consider the following sample questions:

Step 1: How many subclasses of sweater do we need?

Step 2: What retail price points will we try to hit?
Step 3: How may different "types" of each subclass should we have?
Step 4: What % of the “open -to-buy” do we allocate?

Note : Although the number of sizes, colours and vendors plays an important part
in assortment planning, you convinced "task master" Susan to forgo these details,
at least for this year. You can adjust these factors (if necessary) after this year’s
buy is complete.

The first assortment plan for sweaters is as follows:

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 Case Stud y Buying Practices

ASSORTMENT PLAN Class: Sweaters

Sub Class Price No. of % of sales No. of sizes No. of Units to

Point types & colours Vendors Buy

Pull Over $50 3 30 91

$75 2 15 30
Cardiga $50 2 15
n
$75 1 5
T-neck $35 1 25
$65 1 10

From the above information, calculate how many units Bill & Steve can purchase
in each price point. Be sure to take into consideration that the total planned
purchases for "sweaters" are $15,200 at retail.

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 Case Stud y Buying Practices

V ENDOR ANALYSIS:

VENDOR ANALYSIS
Store: Department: Men's Wear Period Covered: Aug. to
Jan
Name Net Purchases % Gross Disc. Co-op Remarks
Sales Shipped Margin Adv.

ABC Co. $23000 $13500 96% 43.5% 5% 2% Great supplier

XYZ Co. $11500 $6500 55% 45.1% 0% 2% Good margin, poor

delivery

New Co. $18300 $9000 78% 39.1% 3% 5% Trendy line, good

Co-op $ available.

As Susan explains, the vendor analysis takes a lot of the guesswork out of whom
we should be supporting in the upcoming season. It also helps the buyer
determine where to get the most for his/her money.

Both the quantitative and qualitative elements of retailing (historical statistics like
the above and general customer acceptance respectively) must be considered
in this analysis. Again, Susan’s accounting department puts their best efforts
forward to compile the above information about major men's wear supplier
activity from the previous fall season.

This information gives the buyer hard facts to back up his/her initial gut feeling.
The % shipped indicates how much of the booked merchandise was actually
received. You should know the booking discounts and co-op advertising
percentages (of purchases) before entering into any purchase agreements. The
most powerful figure, the ending gross margin, takes into account the general
acceptance level a product receives from the store’s customers. Not
surprisingly, the lower the gross margin, the more markdowns you must take to
clear stock.

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 Case Stud y Buying Practices

OPEN -TO-B UY
After completing the merchandise planning, assortment planning and vendor
analysis tasks as outlined, you must ask the final questions: How many of the
planned purchases do we book? How do we control inventory levels during the
season?

Open-to-buy (otherwise known as OTB), serves as the merchandise budget. It

provides a month-to-month running balance of all sales, purchases, orders
placed, receipts, and markdowns. Think of OTB as the merchandise a store
needs, minus all available merchandise (including orders placed).

Since Bill had already placed some “small” orders (as he called them) for August,
September and October deliveries to Jackson’s, Susan made him fill out the
following planned monthly “open-to-buy”:

Exercise : Calculate Bill’s “open-to-buy” for September to January. Please use

the following form and information supplied.

Planned Monthly Open-to-Buy

Date: Division: Men's Department All Season: Fall 99
Season
Month 1 Month 2 Month 3 Month 4 Month 5 Month 6
Total

August Sept. Oct. Nov. Dec. Jan.

BOM Inv. Plan $90000 $120000 $130000 $150000 $180000 $130000

Actual
Sales Plan $26000 $39000 $33000 $33000 $130000 $64000 $325000
Actual
Purchases Plan $58600 $52900 $56000 $66000 $93000 $30400 $356000
Actual
Markdowns Plan $2600 $3900 $3300 $3300 $13000 $6400 $32500
Actual
EOM Inv. Plan $120000 $130000 $150000 $180000 $130000 $90000
Actual

On Order $22000 $30000 $25000 $0 $0 $0 $77000

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 Case Stud y Buying Practices

Open-to-Buy $36000 ? ? ? ? ?

Answers on the next page.

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 Case Stud y Buying Practices

Answers

August Sept. Oct. Nov. Dec. Jan.

Open-to-Buy $36000 $22900 $31000 $66000 $93000 $30400

Note: The “open-to-buy” equals planned purchases, less any orders. You need
not spend all your OTB right away. You should actually retain some dollars in
reserve. Use them to keep your inventory levels in line if you fall short of your sales
projection.

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