8/11/2019 Exercises 2014

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Merchandise Management: Exercises

1. You have a budget to purchase 100 Tshirts for your store. All the T-shirts haveto be purchased from one supplier. The distribution of sizes will be as follows:Small12 %, Medium28 % , Large 32 %, X Large 28 %. Four colors Red, Blue, White and Black will be represented equally in the colour assortment.One third of the assortment will be half sleeves and the balance will be fullsleeves. Develop an assortment plan based on this information.

2. You are the buyer for mens shirts for a department store chain. You need topurchase short sleeve, plain, 100 % cotton shirts from two vendors (LouisPhilippe75 % and Arrow25 %). Each LP shirt will cost Rs. 200, while each

Arrow shirt will cost 300. Colours will be distributed in the following manner:LPWhite (50 %), Blue (35 %), Yellow (10 %), Pink (5 %)

ArrowWhite (70 %), Blue (30 %)All colours will be purchased in the following size distribution:3910 %, 4025 %, 4235 %, 30 %Based on the information provided, develop an assortment plan.

3. Big Buy is a menswear retailer. The management expects a 10 % increase insales in the next year. No major fluctuation in the sales pattern is expected in theyear to come. The total reductions for the next year are Rs.1,26,500. With theinformation given you need to prepare a six-month merchandise budget for thecurrent year. The sales and other data for the past year are given below.The sales for the six months January to June are given below:

SIX MONTH MERCHANDISE PLAN

JANUARY FEBRUARY MARCH APRIL MAY JUNE TOTAL

SALES 200,000 180,000 190,000 200,000 180,000 200,000 1,150,000

% OF TOTAL 17.39 15.65 16.52 17.39 15.65 17.39 100.00

STOCK: SALES 1.8 1.5 1.5 1.8 1.5 2

RATIO % OF

REDUCTIONS 10 10 15 25 25 15 100

OTB is a control figure that represents the amount of merchandise the buyer mayplace an order for, without exceeding the planned stock figure at the end of the

period. It is the difference between planned purchases for a period and themerchandise orders already placed or received for that period.

OTB for the balance of the month = planned purchases for the month merchandise received during the month outstanding orders to be deliveredduring the month.

It can also be calculated as Planned EOM StockProjected EOM Stock.Or can be expressed as:

8/11/2019 Exercises 2014

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Merchandise needed for the periodmerchandise available = OTB

4. Calculate the OTB for the month of April given the following data. Plannedpurchases for April Rs.60, 000. Goods received from the 1 st to the 15 th of AprilRs.35, 000 and orders to be delivered in April are worth Rs.12, 000.

5. A buyer for a chain store has planned purchases of Rs 16, 80,000 for hiscategory of goods. 940,000 worth of goods have already been received in Juneand sent to the branches. A balance of Rs.690, 000 worth of goods is pending fordelivery in the month of June. What is the buyers OTB for the month of June?

6. Ms Fussed, the owner of Fashion boutique watches the open to buy figure verycarefully each month. She uses one OTB figure for her small shop that includesdresses, suits, scarves, jewellery and other accessories. For September, shehas planned to purchase Rs.52, 000 worth of stock. By the 5th of September,she has received Rs.8, 000 worth of dresses, Rs.10, 000 worth of suits, Rs.900of scarves, Rs.1, 100 worth of jewellery and Rs.400 of other accessories. Ashipment of dresses and suits worth Rs.12, 000 arrived on September 16th.

What is the OTB amount that is available to her for the month of September?

7. The inventory at retail for a product in a dept store stood at Rs. 40,000 on August1, with an inventory planned at Rs. 50,000 on August 31. Planned sales wereRs.25, 000 with mark downs of Rs.2, 000 for the month. The buyer had alreadymade commitments for August of Rs.12, 000 at retail. Calculate the OTB

8. Anita, a casual wear buyer for Go Shop department store, is planning to buy alarge number of casual wear t-shirts, etc for the annual sale in January. Sheneeds to determine whether she has adequate funds. Help her determine theOTB as on December 18th. The following data is available :

Present Inventory at retail (Dec 18th) : 10,000Inventory commitments (Dec 18th) : 2,000Planned EOM inventory (Dec 31st) : 30,000Planned sales : 8,500

Actual Sales : 7, 100Planned markdowns : 1,000

Actual markdowns : 850