Open-to-buy is a residual, and most of it is already spent

The offer

Buyers talk about their budget as though somebody handed them one. Nobody does. What a retailer is still allowed to order is not a decision at all. It is a leftover. This lesson works it out from the same bookkeeping as the last one. One real week is computed four defensible ways, and gives four different answers. There is also one term people leave out, and leaving it out makes the leftover read comfortably positive.

Tuesday 6 October 2026, 09:12. An email lands with Cormac Straiton and Rosalind Marner both on it.

Sennowe Knitting is holding undyed merino yarn against a cancelled programme. If Penhallow commits this week, Sennowe will dye, knit and ship 4,000 units of PK-4180 — the merino half-zip that is the best line in the department — for delivery in week 13, the week starting 16 November. Same cost as the original buy: GBP 25.35 landed against a GBP 65.00 ticket.

Cormac's case takes one line and it is a good one. PK-4180 is running ahead of its own plan while the department is behind. It is a proven full-price line. And a seven-week repeat on a knitwear style is a rare thing to be offered in October.

Rosalind's answer takes ten minutes and a piece of arithmetic. It is not "no", and it is not "yes". It is a number.

Open-to-buy is the intake row, rearranged

Start from lesson 1's identity and solve it for the row you are trying to fill:

closing stock = opening stock + intake − sales − markdown

intake = closing stock + sales + markdown − opening stock

That is the whole of open-to-buy. If you know what you intend to own at the end of a period, what you intend to sell in it, what you intend to mark down, and what you own now, then the intake you are allowed is fixed. There is one more term, and it is the one that ruins people:

OTB = planned closing stock + planned sales + planned markdown − opening stock − intake already on order

Nobody sets an OTB. It falls out of four decisions, none of which was about buying, plus one fact about what you have already committed to. That is why it moves in a week when nobody bought anything. And it is why arguing about the OTB figure itself is always the wrong argument. The argument is about one of the five things underneath it.

Penhallow's WSSI is at retail, so its OTB is at retail. A cost-basis OTB is a perfectly good instrument, and it is a different number for the same week. Say which. Once.

Prove it on the whole phase, where the answer is checkable

Take the four planned figures for the full 20 weeks and put them in.

Now turn to lesson 1's plan grid and add up the intake column across all twenty weeks. It is GBP 6,123,000. Not close to it — it. At a GBP 65.00 ticket that is 94,200 units, and at a 61.0% intake margin it is GBP 2,387,970 of cash.

That identity is worth more than any explanation of it. The intake plan is not a decision that was taken. It is a consequence of four decisions that were taken. Somebody chose a sales plan, a stock figure to end on and a markdown assumption, and inherited an opening stock. The buy fell out. Every argument about "can we afford this order" is really an argument about one of those four.

The window that actually matters

Nobody spends a phase OTB. You spend a window of it. At the end of week 6 the live question is weeks 7 to 13 — everything still to land before the last delivery of the phase.

Here is that window computed entirely on plan, as if week 6 had never happened.

Zero. Not roughly zero, not a small residue: exactly zero. The plan's intake row is the leftover, and the buyer signed all of it in March. This is the single most useful thing to understand about in-season buying, and it disappoints everybody the first time.

A plan that has been fully committed has no open-to-buy left in it, by construction. A large positive OTB in the middle of a phase means one of two things, and only one of them is good. Either the plan deliberately held money back for buying in season, or somebody has not loaded the on-order line.

The trap, and it is always the same trap

Run the same window and leave out the last term.

Planned closing GBP 4,017,000, plus planned sales GBP 2,431,000, less the actual opening stock of GBP 2,488,200, gives GBP 3,959,800. At a GBP 65.00 ticket that reads as 60,920 units of headroom.

That number is not wrong arithmetic. It is the right arithmetic on the wrong question. It is how much stock Penhallow may own across the window, not how much it may still commit. The 62,400 units already on the water and in production fill it and then some.

Now put the real opening stock in

Everything above used the plan's week 6 closing stock. The real one is GBP 2,488,200.

Planned closing GBP 4,017,000, plus planned sales GBP 2,431,000, plus planned markdown of nothing, less opening stock GBP 2,488,200, less intake on order GBP 4,056,000, is minus GBP 96,200.

Look back at lesson 1. GBP 96,200 is exactly the cumulative sales miss for weeks 1 to 6. It has to be. Intake ran to plan and no markdown was taken, so the entire difference between the planned and the actual opening stock is the sales shortfall — and the OTB formula subtracts that opening stock. With everything else unchanged, negative OTB is just the amount you are over on stock, written in a different row.

Rebasing, and the half-rebase that nearly everybody does

Two of the terms in that calculation are now known to be wrong. The department has traded at 89.6% of plan for six weeks, and nobody in the building believes weeks 7 to 13 will do 100%. Rosalind cuts the remaining forecast by a tenth — slightly kinder than the six weeks she has — and runs it again.

Rebase the sales line alone and OTB becomes minus GBP 339,300. Which feels wrong, and is not. Cutting your sales forecast reduces your buying room, because you now expect to sell less of what you already own.

But that is only half a rebase, and it is the half everybody stops at. If Penhallow genuinely expects to sell 10% less between now and week 13, it should also want to own 10% less at the end of week 13. Cut the closing-stock target to GBP 3,615,300 as well and the answer is minus GBP 741,000.

Every row is correct arithmetic. They differ only in which numbers you are still willing to believe, and the honest one is the row where both the sales forecast and the stock target have been rebased. Penhallow is committed to 11,400 units more than the department should own. That is GBP 288,990 of cash at cost sitting in ships and knitting machines that nobody can now stop.

The reason the half-rebase is so common deserves a sentence, because it is psychological rather than technical. The sales line feels like a measurement and the stock target feels like a plan, so a planner under pressure adjusts the measurement and leaves the plan alone. They are both plans. Rebase both or neither.

Why a markdown releases open-to-buy, and why that is not good news

Look at the markdown term. If Rosalind books a markdown of GBP 250,000 into week 12, planned markdown for the window stops being zero, and the OTB moves from minus GBP 741,000 to minus GBP 491,000.

That is real and it is not a trick. A markdown reduces the retail value of the stock you will be holding, so the same physical intake now fits under a lower stock ceiling. A markdown taken in week 6 genuinely releases buying room in week 9.

And it is exactly as much of a gift as it sounds. The open-to-buy released is the value you have just destroyed, pound for pound. A planner who marks down in order to create room to buy has built a machine that turns stock into permission to buy more stock, and the machine only ever runs one way. Mark down because the goods will not sell at the ticket. Then, separately, notice that your OTB moved.

The delivery nobody ordered

One more entry in the actual grid deserves its own paragraph, because it is the retail idea a factory-side reader finds hardest to accept.

In week 7 Penhallow booked in 10,200 units, GBP 663,000 at retail, against a plan of 7,200 units and GBP 468,000. Nothing was over-ordered. A supplier finished early, saw a sailing, and shipped week 9's delivery four weeks ahead of its window. The distribution centre received it because it matched a live purchase order.

At the end of week 7 Penhallow owned GBP 2,930,200 of knitwear against a plan of GBP 2,606,500 — GBP 323,700 over, of which GBP 195,000 arrived early and unasked, in the week the department was already running behind.

A factory treats early delivery as a favour, and inside a factory it is one. A retailer that receives four weeks early owns four weeks of stock it planned not to own, in a week whose intake was already spent, and it will pay for those weeks in space, in cover and eventually in markdown. This is why every large retailer publishes a routing guide with a delivery window rather than a delivery date, and why arriving before the window opens breaks it in the same way arriving after it closes does. The specific windows, and what a retailer charges for missing one, differ by retailer and by year. Read the guide you are shipping against, never a general figure.

The answer Rosalind gives

The repeat is refused, and the refusal is a number rather than a feeling. 4,000 units at GBP 65.00 is GBP 260,000 of retail value proposed into a window that is already GBP 741,000 over.

But the useful part is the question she puts back, because "no" on its own teaches nobody anything. What does it displace? In a department with negative open-to-buy there is no extra money. So buying the repeat means either owning more than the plan allows — which is the definition of an overbuy — or taking something else out. Cormac goes to look for something to take out and finds nothing. Every delivery from here to week 13 is inside its supplier's cancellation window, which is lesson 3's subject and the reason this season is already decided.

So three things happen instead, and the third is the one that matters most.

1. Yes to the line, no to the window. Sennowe is offered the same yarn holding against spring, where an OTB exists because nothing has been committed yet.
2. The December markdown plan is brought forward to be decided in week 11 rather than week 15, on the grounds that a decision made with eight weeks of trading left is worth more than the same decision made with four.
3. The on-order row goes on the WSSI, by delivery week, from the following Monday. It was always in the buying system. It was never on the control sheet, and the control sheet is what people look at.

And the honest cost of the refusal, said out loud rather than buried. PK-4180 will go out of stock in the peak, and some of the sales it would have taken are genuinely extra rather than borrowed from the 11,400 units Penhallow already owns too many of. Rosalind cannot say what share. Nobody can before the event. So she writes the decision and her reasoning into the season file, so that the post-season review can test it against what actually happened. A judgement recorded is a judgement that can be learned from. A judgement that was simply the mood of a Tuesday is not.

Act as a retail merchandiser who owns the open-to-buy and has no attachment to any product. I am being offered [DESCRIBE THE ORDER - UNITS, RETAIL PRICE, COST, DELIVERY WEEK]. Here is my position. The window I care about is weeks [FROM] to [TO]. Planned closing stock at the end of that window is [AMOUNT]. Planned sales across it are [AMOUNT]. Planned markdown across it is [AMOUNT]. My actual opening stock at the start of it is [AMOUNT]. My intake already on order for those weeks is [AMOUNT]. If I have not given you that last figure, ask for it and do not go on. State whether these are at retail or at cost, and use one basis throughout. Then do the following. First, compute the open-to-buy from the five terms and show every line of the subtraction. Second, compute it again ignoring intake on order, show me that number too, and explain in one sentence why it answers a different question. Third, tell me what the department has actually traded at against plan so far. I will give you [CUMULATIVE PLAN SALES] and [CUMULATIVE ACTUAL SALES]. Recompute the OTB with the remaining sales forecast rebased at that rate. Fourth, recompute it a fourth time with the closing-stock target rebased by the same factor, and tell me plainly which of the four numbers you would put in front of a director, and why. Fifth, express the final figure in units at my ticket price, and in cash at my intake margin. Sixth, if the answer is negative, do not stop at no. Tell me what would have to come out of the window to make room, and what the offer would displace. Show your arithmetic at every step.