Which budget is essential for triggering monthly merchandise purchases in MAP?

Which budget is essential for triggering monthly merchandise purchases in MAP?

• A. Marketing budget
• B. Payroll budget
• C. Advertising budget
• D. OTB budget

Answer: (D)

Open-to-Buy budget guides how much inventory you can purchase in a given period. In MAP, this budget is the trigger for monthly merchandise purchases because it sets the exact amount you’re allowed to spend on new stock to meet forecasted demand while keeping target stock levels. It’s calculated by taking the planned sales for the period plus the desired ending inventory, then subtracting what you already have in stock and any orders you’ve already placed. If there’s available Open-to-Buy, you can place replenishment orders up to that amount; if not, you pause buying to avoid overstock or cash flow issues. Other budgets like marketing, advertising, or payroll govern non-inventory expenses, so they don’t determine how much merchandise you can buy.

Open-to-Buy budget guides how much inventory you can purchase in a given period. In MAP, this budget is the trigger for monthly merchandise purchases because it sets the exact amount you’re allowed to spend on new stock to meet forecasted demand while keeping target stock levels. It’s calculated by taking the planned sales for the period plus the desired ending inventory, then subtracting what you already have in stock and any orders you’ve already placed. If there’s available Open-to-Buy, you can place replenishment orders up to that amount; if not, you pause buying to avoid overstock or cash flow issues. Other budgets like marketing, advertising, or payroll govern non-inventory expenses, so they don’t determine how much merchandise you can buy.