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Six Month Merchandise Plan
One of the most difficult tasks facing the retail
merchandiser is determining what to carry. Careful
planning is necessary if the retailer is to carry theright stock in the right quantities. Thus planning
is of great importance in merchandising goods to
achieve a profit. To a great; extent, the success orfailure of the merchandising division is dependent
on the degree and quality of the planning that takes
place.
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Planning Sales
Actual planning begins with sales.
Sales are planned on net basis (gross sales
customer returns).
Retailer must be aware of factors affecting the
customers ability and motivation to buy.
Shifts in customer demand occur for a vareity
of reasons.
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Planning Sales
1. Obtain sales from last year for each monthof the plan.
2. Determine projected sales volume foreach month in the plan. Consider factorscompetition, review past sales history andcurrent trends.
3. Figure % increase or decrease of plannedsales over last years sales.
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Planning Sales
% Sales increase or decrease =
this year planned saleslast year actual sales
------------------------------------------------------- x 100
last year actual sales
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Planning Stocks
The buyer determines the amt of stock needed at thebeginning of each month(BOM) in order to to meet
the planned sales figures. Retailer use a variety of methods to plan stock in
order to provide a balanced inventory in relation toestimated sales.
1. The basic stock method
2. Stocksales ratio method
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The Basic Stock Method
Basic stock is defined as the the minimum stock thatshould be maintained.
The BOM stock be sufficient to cover the sales forthat month and allow for a reserve of the basic stock.
There should be a basic inventory on hand that
remains constant regardless of the rate of sale. Thestock to be carried at the beginning of the month isdetermined by adding value of basic stock toplanned sales
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The Basic Stock Method
BOM Stock = Planned sales + Basic stock Basic Stock = Average StockAverage Monthly
Sales
Average stock = Planned sales for the season--------------------------------------
Stock turn for season
Average Monthly Sales = Planned sales for the season
---------------------------------------
No of months in the season
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The Basic Stock Method
Example
A dept has a planned stock turnover of 4
and planned sales of 160000 for a sixmonth season. Plan BOM stock for April if
planned sales for April are $20000?
l i
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Solutiona) Average stock for season = sales for the season
----------------------- = 160000/4 = $ 40000
stock turn for the seasonb) Average monthly sales = sales for season
--------------------------- = 160000/6 = $ 26667
no of months in the season
c) Basic stock = Average stockAverage monthly sales= 4000026667
= 13333
d) BOM stock = sales for the month + basic stock = 20000 + 13333
= $33333
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Stock-Sales Ratio
BOM stock = Planned Monthly Sales x Stock-Sales
Ratio
Stock-Sales Ratio = BOM Stock
------------------------
Net sales for the month
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Stock-Sales Ratio
Examples
Determine the stock-sales ratio when BOM stock
at retail is $50000 and retail sales for the monthare $35000?
The girls dept had planned sales of $60000 for themonth of April. Past records indicate a stock-sales ratio of 5.4. What should be planned BOMstock for month of April?
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SIX MONTH MERCHANDISE PLAN Plan Actual
% initial markup
% reductions
Department Name________________ % maintained markup
% alteration expenses
Department Number _______________ % cash discount
% gross margin
Merchandise Manager _______________ % operating expenses
% net profit
Buyer___________________________ season turnover
average stock
Period___________________________ basic stock
SPRING FEB MARCH APRIL MAY JUNE JULY SEASON
FALL AUG SEP OCT NOV DEC JAN TOTALS
SALES Last year
Plan
Plan % of season
Revised Plan
Actual
EOM STOCK Last yearPlan
Revised
Actual
MARKDOWNS Last year
Plan
Revised
Actual
% of Plan MD
BOM STOCK Last year
Plan
Revised
Actual
Planned Purchases Last year
at Retail Plan
Revised
Actual
Planned Purchases Last year
at Cost Plan
Revised
Actual
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Six Month Merchandise Plan
First fill all information given in the sum 8.5-1
Planned sales - $650000
Reductions 22% of sales = 22% x 650000 = 143000 Seasons turnover =1.9
Operating expenses 34.0%
Profit desired 7.5% Alteration costs 0.5%
Cash discounts 1.6%
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SIX MONTH MERCHANDISE PLAN Plan Actual
% initial markup
% reductions 22.00%
Department Name________________ % maintained markup
% alteration expenses 0.50%
Department Number _______________ % cash discount 1.60%
% gross margin
Merchandise Manager _______________ % operating expenses 34.00%
% net profitBuyer___________________________ season turnover 1.9
average stock
Period___________________________ basic stock
SPRING FEB MARCH APRIL MAY JUNE JULY SEASON
FALL AUG SEP OCT NOV DEC JAN TOTALS
SALES Last year
Plan 650000
Plan % of season
Revised Plan
Actual
EOM STOCK Last year
Plan
Revised
Actual
MARKDOWNS Last year
Plan
Revised
Actual
% of Plan MD
BOM STOCK Last yearPlan
Revised
Actual
Planned Purchases Last year
at Retail Plan
Revised
Actual
Planned Purchases Last year
at Cost Plan
Revised
Actual
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Six Month Merchandise Plan
Write the % of planned sales % in the sales column - planed $ of season row
Feb 15.5 March 17.5 April 19.0 May 18.0
June 15.5 July 14.5
Write the % of planned reductions in the markdown column
%of plan MD- row Feb 15 March 12
April 19 May 16
June 18 July 20
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SIX MONTH MERCHANDISE PLAN Plan Actual
% initial markup
% reductions 22.00%
Department Name________________ % maintained markup
% alteration expenses 0.50%
Department Number _______________ % cash discount 1.60%
% gross margin
Merchandise Manager _______________ % operating expenses 34.00%
% net profitBuyer___________________________ season turnover 1.9
average stock
Period___________________________ basic stock
SPRING FEB MARCH APRIL MAY JUNE JULY SEASON
FALL AUG SEP OCT NOV DEC JAN TOTALS
SALES Last year
Plan 650000
Plan % of season 15.5 17.5 19 18 15.5 14.5
Revised Plan
Actual
EOM STOCK Last year
Plan
Revised
Actual
MARKDOWNS Last year
Plan
Revised
Actual
% of Plan MD 15 12 19 16 18 20
BOM STOCK Last yearPlan
Revised
Actual
Planned Purchases Last year
at Retail Plan
Revised
Actual
Planned Purchases Last year
at Cost Plan
Revised
Actual
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Six Month Merchandise Plan
Distribute monthly planned sales.
= % of seasons sales x Net sales
Feb = 15.5% x 650000 = 100750March = 17.5% x 650000 = 113750
April = 19.0% x 650000 = 123500
May = 18.0% x 650000 = 117000
June = 15.5% x 650000 = 100750
July = 14.5% x 650000 = 94250
-----------------
Planned sales 650000
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Six Month Merchandise Plan Distribute monthly planned reductions.
= % of reductions x Net sales
=22% x 650000 = 143000
Feb = 15% x 143000 = 21450March = 12% x 143000 = 17160
April = 19% x 143000 = 27170
May = 16% x 143000 = 22880
June = 18% x 143000 = 25740
July = 20% x 143000 = 28600
-----------------
Planned reductions 143000
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SIX MONTH MERCHANDISE PLAN Plan Actual
% initial markup
% reductions 22.00%
Department Name________________ % maintained markup
% alteration expenses 0.50%
Department Number _______________ % cash discount 1.60%
% gross margin
Merchandise Manager _______________ % operating expenses 34.00%
% net profit
Buyer___________________________ season turnover 1.9
average stock
Period___________________________ basic stock
SPRING FEB MARCH APRIL MAY JUNE JULY SEASON
FALL AUG SEP OCT NOV DEC JAN TOTALS
SALES Last year
Plan 100750 113750 123500 117000 100750 94250 650000
Plan % of season 15.5 17.5 19 18 15.5 14.5
Revised Plan
Actual
EOM STOCK Last year
Plan
Revised
Actual
MARKDOWNS Last year
Plan 21450 17160 27170 22880 25740 28600 143000
Revised
Actual
% of Plan MD 15 12 19 16 18 20
BOM STOCK Last yearPlan
Revised
Actual
Planned Purchases Last year
at Retail Plan
Revised
Actual
Planned Purchases Last year
at Cost Plan
Revised
Actual
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Six Month Merchandise Plan Determine BOM stock figures:
a) Basic stock = Average InventoryAverageMonthly Sales
= Planned sales - planned sales
------------------ -------------------
stock turnover no of months= 650000 - 650000
------------- ----------
1.9 6= 342105.26108333.33
= 233771.93
= 233772
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Six Month Merchandise Planb) BOM stock = Planned monthly sales +
Basic stock
Feb = 100750 + 233772 = 334522
March = 113750 + 233772 = 347522
April = 123500 + 233772 = 357272
May = 117000 + 233772 = 350772
June = 100750 + 233772 = 334522
July = 94250 + 233772 = 328022-----------------
Total Planned BOM 2052632
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SIX MONTH MERCHANDISE PLAN Plan Actual
% initial markup 51.15%
% reductions 22.00%
Department Name________________ % maintained markup
% alteration expenses 0.50%
Department Number _______________ % cash discount 1.60%
% gross margin 41.50%
Merchandise Manager _______________ % operating expenses 34.00%
% net profit 7.50%
Buyer___________________________ season turnover 1.9
average stock
Period___________________________ basic stock 233772
SPRING FEB MARCH APRIL MAY JUNE JULY SEASON
FALL AUG SEP OCT NOV DEC JAN TOTALS
SALES Last year
Plan 100750 113750 123500 117000 100750 94250 6500
Plan % of season 15.5 17.5 19 18 15.5 14.5
Revised Plan
Actual
EOM STOCK Last year
Plan
Revised
Actual
MARKDOWNS Last year
Plan 21450 17160 27170 22880 25740 28600 1430
Revised
Actual
% of Plan MD 15 12 19 16 18 20BOM STOCK Last year
Plan 334522 347522 357272 350772 334522 328022 20526
Revised
Actual
Planned Purchases Last year
at Retail Plan
Revised
Actual
Planned Purchases Last year
at Cost PlanRevised
Actual
Si h h di l
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Six Month Merchandise Plan End of month EOM = Beginning inventory of next
month
July EOM inv = calculate average BOM
-----------------------no of months
OR
average inv = Sales = 650000 = 342105
--------- ---------
Turnover 1.9
SIX MONTH MERCHANDISE PLAN Plan Actual
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SIX MONTH MERCHANDISE PLAN Plan Actual
% initial markup 51.15%
% reductions 22.00%
Department Name________________ % maintained markup
% alteration expenses 0.50%
Department Number _______________ % cash discount 1.60%
% gross margin 41.50%
Merchandise Manager _______________ % operating expenses 34.00%
% net profit 7.50%
Buyer___________________________ season turnover 1.9
average stock
Period___________________________ basic stock 233772
SPRING FEB MARCH APRIL MAY JUNE JULY SEASON
FALL AUG SEP OCT NOV DEC JAN TOTALS
SALES Last year
Plan 100750 113750 123500 117000 100750 94250 650000
Plan % of season 15.5 17.5 19 18 15.5 14.5
Revised Plan
Actual
EOM STOCK Last year
Plan 347522 357272 350772 334522 328022 342105*
Revised
Actual
MARKDOWNS Last year
Plan 21450 17160 27170 22880 25740 28600 143000
Revised
Actual
% of Plan MD 15 12 19 16 18 20
BOM STOCK Last year
Plan 334522 347522 357272 350772 334522 328022 2052632
Revised
Actual
Planned Purchases Last year
at Retail Plan
Revised
Actual
Planned Purchases Last year
at Cost Plan
Revised
Actual
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SIX MONTH MERCHANDISE PLAN Plan Actual
% initial markup 51.15%
% reductions 22.00%
Department Name________________ % maintained markup
% alteration expenses 0.50%
Department Number _______________ % cash discount 1.60%
% gross margin 41.50%
Merchandise Manager _______________ % operating expenses 34.00%
% net profit 7.50%Buyer___________________________ season turnover 1.9
average stock
Period___________________________ basic stock 233772
SPRING FEB MARCH APRIL MAY JUNE JULY SEASON
FALL AUG SEP OCT NOV DEC JAN TOTALS
SALES Last year
Plan 100750 113750 123500 117000 100750 94250 650000
Plan % of season 15.5 17.5 19 18 15.5 14.5
Revised PlanActual
EOM STOCK Last year
Plan 347522 357272 350772 334522 328022 342105*
Revised
Actual
MARKDOWNS Last year
Plan 21450 17160 27170 22880 25740 28600 143000
Revised
Actual
% of Plan MD 15 12 19 16 18 20
BOM STOCK Last year
Plan 334522 347522 357272 350772 334522 328022 2052632
Revised
Actual
Planned Purchases Last year
at Retail Plan 135200 140660 144170 123630 119990 136933 800583
Revised
Actual
Planned Purchases Last year
at Cost Plan
RevisedActual
Si M h M h di Pl
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Six Month Merchandise Plan Planned Purchase at Cost =
Gross Margin% = Profit % + Expense %
= 7.5 % + 34.0 %= 41.5 %
Cost % = (100 % - 41.5%) = 58.5%
Planned Purchase at Cost = Planned purchase at
retail x (58.5%)Feb = 135200 x 58.5% = 79092
March = 140660 x 58.5% = 82286
April = 144170 x 58.5% = 84339
May = 123630 x 58.5% = 72324June = 119990 x 58.5% = 70194
July = 136933 x 58.5% = 80106
-------------
Total Purchase at Cost = 468341
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SIX MONTH MERCHANDISE PLAN Plan Actual
% initial markup 51.15%
% reductions 22.00%
Department Name________________ % maintained markup
% alteration expenses 0.50%
Department Number _______________ % cash discount 1.60%
% gross margin 41.50%
Merchandise Manager _______________ % operating expenses 34.00%
% net profit 7.50%
Buyer___________________________ season turnover 1.9
average stock
Period___________________________ basic stock 233772
SPRING FEB MARCH APRIL MAY JUNE JULY SEASON
FALL AUG SEP OCT NOV DEC JAN TOTALS
SALES Last year
Plan 100750 113750 123500 117000 100750 94250 650000
Plan % of season 15.5 17.5 19 18 15.5 14.5
Revised PlanActual
EOM STOCK Last year
Plan 347522 357272 350772 334522 328022 342105*
Revised
Actual
MARKDOWNS Last year
Plan 21450 17160 27170 22880 25740 28600 143000
Revised
Actual
% of Plan MD 15 12 19 16 18 20
BOM STOCK Last year
Plan 334522 347522 357272 350772 334522 328022 2052632
Revised
Actual
Planned Purchases Last year
at Retail Plan 135200 140660 144170 123630 119990 136933 800583
Revised
Actual
Planned Purchases Last year
at Cost Plan 79092 82286 84339 72324 70194 80106 468341
Revised
A t l