Open-to-buy (OTB)
Open-to-buy is a retail budgeting method that controls how much new inventory a buyer can still purchase in a period without overshooting planned stock. The formula is (planned ending inventory + planned sales) − (beginning inventory + on-order). OTB aligns purchasing with sales and cash-flow targets, preventing both overbuying and understocking.
How it's calculated
Start from where you want to end the period, add what you plan to sell, then subtract the stock you already have and have on order:
Open-to-buy = (planned ending inventory + planned sales) − (beginning inventory + on-order)
The result is the budget still available to spend on new merchandise. Recalculate it monthly as actual sales and receipts land.
Why it matters
OTB keeps purchasing tethered to a sales and cash-flow plan instead of gut feel, so buyers don't overbuy into a slow month or underbuy into a hot one. For Shopify merchants juggling many suppliers and seasonal demand, an OTB budget is the guardrail that protects working capital while keeping shelves appropriately full.
Track this automatically
Logistified calculates and monitors metrics like this across your whole Shopify catalog and turns them into reorder alerts and purchase orders.