unit 2 respond asap

Unit 2

Fayette Lands

4/8/2014 10:28:02 PM

I am in retail management and there are two formulas that I used daily and monthly to project profit for my store, increase profits, and protect my bottom line from shrink and lost in sells. (1) and (2) They are: Profit Percentage Formula(used to determine how much profit I can make off of an item and what location I stand to make the biggest impact) Retail-Cost/Retail Example: An As Seen On TV item $10.99-$5.00/$10.99. This item will give me 55% gross profit that I can make from each sale. Meaning that my store makes $5.99 for an item that only cost the store $5.00. So I broke even and made a profit.The second is Open To Buy (OTB). OTB=Planned Sales+Planned Markdown+Planned End of Month Inventory-Planned Beginning of Month Inventory(this gives you a forecast of what you are open to buy so that you do not under buy and miss out on sales or over buy and end up with an extreme amount of inventory to carry over.)Definition: Merchandise budgeted for purchase during a certain time period that has not yet been ordered. It is also the process of planning merchandise sales and purchases. Example: if my store has an inventory to start April 1st off with 250,000 and I planned to have 255,000 on April 30th. My planned sales for my store are 50,000 and planned markdowns are $500. My Open To Buy for my store is $55,500. (3) The advantages of using these formulas are basic loss prevention for your store. You learn to work wise instead of hard when you plan your store for success. Every store lifeline is profit and most fall under because the don't plan well enough. Difficulties in using the formulas I find is the lack of understanding of planning and forecasting in business. These formulas are foreign if you don't plan. This is like your blueprint for profit. (4) I honestly can not think of a field that doesn't operate off of some formula to make money or progress. In order to operate I think you have to have a goal and a way to get to it. That involves some form of planning and formula in my opinion.