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Chapter 13 Merchandise Planning Systems
Merchandise Management 13- Retail  Pricing Chapter 15 Retail Communication Mix Chapter 16 Merchandise Planning Systems    Chapter 13 Managing Merchandise Assortments Chapter 12 Buying Merchandise Chapter 14
Questions ,[object Object],[object Object],[object Object],[object Object],13-
Types of Merchandise Management Systems ,[object Object],[object Object],[object Object],[object Object],13- Fashion Merchandise Unpredictable Demand Difficult to Forecast Sales Merchandise Budget Plan Open-to-Buy The McGraw-Hill Companies Inc./Ken Cavanagh Photographer The McGraw-Hill Companies, Inc./Lars A. Niki, photographer
Staple Merchandise Planning ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],13-
Inventory Levels for Staple Merchandise 13- Cycle (base) stock : inventory that goes up and down due to the replenishment process Backup (buffer, safety) stock Inventory needed to avoid stockout
Inventory Levels for Staple Merchandise 13- Retailers try to reduce the stock level to keep  Inventory Investment low by reordering and receiving merchandise often but without increased administrative and transportation costs with frequent  reorders
Basic Stock ,[object Object],13- Cost of Carrying Inventory Lost Sale Due  to Stockout
Factors Determining Backup Stock ,[object Object],[object Object],[object Object],[object Object],[object Object],13- More Backup  Stocks Needed  with
13- Relationship between Inventory  Investment and Product Availability Product Availability (Percent) 600 500 400 300 200 100 0 80 85 90 95 100
Staple Merchandise Management Systems ,[object Object],[object Object],[object Object],[object Object],13-
Staple Merchandise Management 13- Ryan McVay/Getty Images Most merchandise at home improvement centers are staples.
Inventory Management Report  for Rubbermaid Merchandise 13- Inventory available sales rate Performance measures Backup stock for desired product availability desired product availability Sales forecasts Appropriate ordering decisions
Order Point ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],13-
Calculating the Order Point ,[object Object],[object Object],13- Order Point = (Demand/Day) x (Lead Time +Review Time) + Backup Stock 132 units = [5.43 units x (14 + 7 days)] + 18 units So Buyer Places Order When Inventory in Stock Drops Below 132 units
Order Quantity ,[object Object],[object Object],13-
Inventory Management Report for Rubbermaid SKUs 13- Avocado Bath Mat Quantity available = Quantity on Hand + Quantity on Order  = 90 Order Quantity = Order Point – Quantity Available Order Quantity = 132 – 90 = 42
Fashion Merchandise Management Systems ,[object Object],13-
Merchandise Budget Plan ,[object Object],[object Object],[object Object],13- Royalty-Free/CORBIS
Steps in Developing a Merchandise Budget Plan ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],13-
Six Month Merchandise Plan  for Men’s Casual Slacks 13-
Monthly Sales Percent Distribution to Season (Line 1) 13- 1. Sales % Distribution to Season   6 mo. data   April   May   June    July   Aug   Sept     100.00% 21.00% 12.00% 12.00% 19.00% 21.00% 15.00% ,[object Object],[object Object],[object Object]
Monthly Sales Percent Distribution to Season (Line 1) Continued ,[object Object],13-
Monthly Sales  (Line 2) 13- ,[object Object],[object Object],[object Object],Monthly sales =  the forecasted total season for the six-month period x monthly sales %
Monthly Reductions Percent Distribution (Line 3) ,[object Object],[object Object],[object Object],13- 3. Reduction % Distribution to Season 6 mo. data   April   May   June  July  Aug  Sept  100.00%   40.00%   14.00%  16.00%  12.00%  10.00%  8.00%
Shrinkage ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],13-
Monthly Reductions (Line 4) 13- Reduction % Distribution  3. Month %  6 mo. data  April   May   June  July  Aug  Sept    100.00%  40.00%   14.00%  16.00%  12.00%  10.00%  8.00%  4. mo.  reductions   $16,500  $6,600  $2,310  $2,640  $1,980  $1,650  $1,320   Monthly Reductions = Total reductions x Monthly reduction %
Beginning of Month (BOM) Stock-to-Sales Ratio (Line 5) ,[object Object],[object Object],13- 5. BOM Stock to Sales Ratio 6 mo. data  April  May   June  July  Aug  Sept 4.0  3.6  4.4  4.4  4.0  3.6  4.0
Steps in Determining  the Stock-to-Sales Ratio  ,[object Object],[object Object],[object Object],[object Object],[object Object],13-
Steps in Determining  the Stock-to-Sales Ratio Continued ,[object Object],[object Object],[object Object],13-
Steps in Determining  the Stock-to-Sales Ratio Continued ,[object Object],[object Object],[object Object],13-
Steps in Determining  the Stock-to-Sales Ratio Continued ,[object Object],[object Object],[object Object],13-
BOM Stock  (Line 6) ,[object Object],[object Object],[object Object],[object Object],13- 6. BOM Inventory 6 mo. data  April  May  June  July  Aug  Sept 98280  98280  68460  68640  98800  98280  8000
End-of-Month (EOM) Stock  (Line 7) ,[object Object],13- 7. EOM Inventory 6 mo. data  April  May  June  July  Aug  Sept 85600  68640  68460  275080  98280  78000  65600
Monthly Additions to Stock  (Line 8) ,[object Object],[object Object],[object Object],[object Object],13- 8. Monthly additions to stock 6 mo. data  April  May  June  July  Aug  Sept 113820  4260  17910  48406  26180  8670  8420
Evaluating the Merchandise Budget Plan ,[object Object],[object Object],[object Object],[object Object],[object Object],13-
Open-to-Buy System ,[object Object],[object Object],[object Object],13- PhotoLink/Getty Images PhotoLink/Getty Images
Six Month Open-to-Buy 13-
Allocating Merchandise to Stores ,[object Object],[object Object],[object Object],[object Object],13-
Inventory Allocation Based on Sales Volume and Stock-to-Sales Ratios ,[object Object],13-
Type of Merchandise Allocated to Stores ,[object Object],13- The assortment offered in a ready-to-eat cereal aisle should match the demands of the demographics of shoppers in a local area
Type of Merchandise Allocated to Stores continued ,[object Object],13-
Sales of Capri Pants by Region 13- Timing of Merchandise Allocation to Stores Seasonality differences and consumer demand differences
Analyzing Merchandise Management Performance ,[object Object],[object Object],[object Object],[object Object],13-
Sell Through Analysis  Evaluating Merchandise Plan 13- A  sell-through analysis  compares actual and planned sales to determine whether more merchandise is needed to satisfy demand or whether price reductions are required.
ABC Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],13-
ABC Analysis Rank Merchandise  By Performance Measures ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],13-
Multiattribute Method for Evaluating Vendors 13- The  multiattribute method  for evaluating vendors uses a weighted average score for each vendor.  The score is based on the importance of various issues and the vendor’s performance on those issues. C Squared Studios/Getty Images
Multiattribute Method for Evaluating Vendors 13-
Evaluating Vendors ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],13-
Home Depot’s Vendor Evaluation 13- Home Depot take vendor evaluations seriously.  Home Depot’s vendor analysis scorecard gives everyone a quick view of how the vendor is doing.  Green is good, but red isn’t.

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Retailmerchandisebudgetplannng

  • 1. Chapter 13 Merchandise Planning Systems
  • 2. Merchandise Management 13- Retail Pricing Chapter 15 Retail Communication Mix Chapter 16 Merchandise Planning Systems Chapter 13 Managing Merchandise Assortments Chapter 12 Buying Merchandise Chapter 14
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  • 6. Inventory Levels for Staple Merchandise 13- Cycle (base) stock : inventory that goes up and down due to the replenishment process Backup (buffer, safety) stock Inventory needed to avoid stockout
  • 7. Inventory Levels for Staple Merchandise 13- Retailers try to reduce the stock level to keep Inventory Investment low by reordering and receiving merchandise often but without increased administrative and transportation costs with frequent reorders
  • 8.
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  • 10. 13- Relationship between Inventory Investment and Product Availability Product Availability (Percent) 600 500 400 300 200 100 0 80 85 90 95 100
  • 11.
  • 12. Staple Merchandise Management 13- Ryan McVay/Getty Images Most merchandise at home improvement centers are staples.
  • 13. Inventory Management Report for Rubbermaid Merchandise 13- Inventory available sales rate Performance measures Backup stock for desired product availability desired product availability Sales forecasts Appropriate ordering decisions
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  • 17. Inventory Management Report for Rubbermaid SKUs 13- Avocado Bath Mat Quantity available = Quantity on Hand + Quantity on Order = 90 Order Quantity = Order Point – Quantity Available Order Quantity = 132 – 90 = 42
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  • 21. Six Month Merchandise Plan for Men’s Casual Slacks 13-
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  • 27. Monthly Reductions (Line 4) 13- Reduction % Distribution 3. Month % 6 mo. data April May June July Aug Sept 100.00% 40.00% 14.00% 16.00% 12.00% 10.00% 8.00% 4. mo. reductions $16,500 $6,600 $2,310 $2,640 $1,980 $1,650 $1,320 Monthly Reductions = Total reductions x Monthly reduction %
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  • 43. Sales of Capri Pants by Region 13- Timing of Merchandise Allocation to Stores Seasonality differences and consumer demand differences
  • 44.
  • 45. Sell Through Analysis Evaluating Merchandise Plan 13- A sell-through analysis compares actual and planned sales to determine whether more merchandise is needed to satisfy demand or whether price reductions are required.
  • 46.
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  • 48. Multiattribute Method for Evaluating Vendors 13- The multiattribute method for evaluating vendors uses a weighted average score for each vendor. The score is based on the importance of various issues and the vendor’s performance on those issues. C Squared Studios/Getty Images
  • 49. Multiattribute Method for Evaluating Vendors 13-
  • 50.
  • 51. Home Depot’s Vendor Evaluation 13- Home Depot take vendor evaluations seriously. Home Depot’s vendor analysis scorecard gives everyone a quick view of how the vendor is doing. Green is good, but red isn’t.