After determining what dollar merchandise to have when a season begins, retailer

Question

After determining what dollar merchandise to have when a season begins, retailers must not make merchandise commitments that would exceed the dollar plan. Dollars planned for merchandise need to be controlled by the open-to-buy (OTB) technique. Write a brief essay (two pages) describing the dollar-merchandise planning methods. For each of the four methods, complete the following requirements: Summarize the inventory method type. What does it involve? Which businesses might benefit most from its use? Give an example of the type of retailer that might use this method. Explain how using this method would affect a retailer

Explanation / Answer

When businesses need to unload merchandise to make room for new products, they typically offer something called factory closeouts. Seasonal goods, store closing merchandise, old products replaced by newer goods and returns are all typical examples of factory closeouts. Basically, these are products that are sold at below original wholesale costs. A perfect example of a product that is offered as a factory closeout is bathing suits. When summer ends, retailers deeply discount bathing suits at the end of the season as a way to sell their excess inventory. Factory closeouts tend to be a win-win for all parties. Businesses make more money by selling their excess merchandise quickly and customers win by getting access to deeply discounted items. The best part of factory closeouts is that they can be high quality, branded items that are perfect for resale. And they can typically be purchased for 10 cents on the dollar. At these prices, businesses can resell factory closeouts for significant profits. However, if not purchased carefully, factory closeout merchandise can be combined with low quality, damaged goods. Therefore, it is essential that you take the time to find the right factory closeout dealer to purchase the best possible product. To guide you through this tricky terrain, I

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