Merchandise Buying and Planning
Merchandise Buying and Planning AMT 318
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This 11 page Class Notes was uploaded by Mrs. Lucinda Kling on Thursday September 17, 2015. The Class Notes belongs to AMT 318 at Washington State University taught by Staff in Fall. Since its upload, it has received 52 views. For similar materials see /class/205976/amt-318-washington-state-university in Apparel, Merchandising, Design & Textiles at Washington State University.
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Date Created: 09/17/15
Cumulative markup I Total markup on all items ratherthan a single item I Called cumulative markup I Sum of all the individual markups under consideration I Total markup to date not including markdowns shortages or discounts Formula I Difference between the total dollar retail and the total dollar cost I Includes existing inventory purchases to date and planned purchases Cumulative Markup Total Retail Total Cost Example I Raren W ee er is assessing her departments performance over a Sixmonth period ending next week The records indicate that the beginning inventory which was 200000 at cost is retailing for 3750 During this period there were additional purchases of 4850 that retail for7250 Moreover she plans to purchase 1500 worth of goods to sell for 2250 What is the cumulative dollar markup to date Other applications for Cum Markup I Purchases to date I Planned purchases I Looking at certain departments I Looking at certain styles I Look at pages 2024 and practice Average Markup I Get a clearer picture ofthe performance of groups of items I Not all items have the same markup I Why differing markups I Variation in cost I Risk I Compensation for lower markups I Competition or Exclusivity Average Markup Percentage I Similarto RMU I For historical AMU use net sales CumulativeMU TotalR AMU 100 Example I In the previous example Karen Wheeler has a Total retail of 13250 and a cumulative Markup of 4900 What is her average dollar markup Complement ofthe AMU Remember these from Individual markup last week TotalRetail 1 00 Complement of AMU Complenent of AMU 100 Total CosF Total Retail Please review pages 29 and 30 Average Retail Price I Buyer often want to set a single retail price on items which have differing costsor markups I Divide the total Retai by the number of items A basic average Tota1Retail of Items ARP Example I The total Retai for a set of 100 shorts is 152615 What is the average retail price Exa m p le thturer produces several price lines from which you have selected the following styles at the prices and quantities specified below I Style number bags Cost per bag I 408 30 950 I 425 20 1150 I 453 10 1350 I For what single retail price can you retail these bags with a MU goal of 49 Values forthe Balance I When planning for periods in time I buyers will plan on markup percentage goals I decide how much sales need to be generated to meet these goals I and what they can spend on inventory cost to realize a particular margin goal I Orders are typically received in multiple shipments I How can you keep track of your goals during a period of time you budgeted for Retail Value for the Balance I For any point within a period oftime say one month a buyer can monitor retail prices to achieve markup goals I What retail price must be set on the balance of my investment to achieve my desired markup goal I Retail Balance Total Retail Retail to Date Example I As a buyer for the Miamibase Surf Side Specialty Shop you plan to invest 2880 in swimsuits for the month of January You would like to obtain an average markup of 40 Your first order of 75 suits costing 15 each results in a 45 markup Find the retail value for the balance of the purchases Cost for Balance I Monitoring the investment being made over a period of time I Instead of revenues being generated I This method focuses on the COGS I May need to add goods to inventory to realize MU g09als I Money may be limited I Either buyfewer items at a higher markup I Or reduce the cost of additional purchases Cost for Balance I A buyer may preferto base planning decisions on the investment to be made I Cost I Rather than on sales revenue to be generated I When you plan using sales COGS and expenses are not taken into account mes buyer may find that they need to purchase additional stock I Funds are usually limited so do you settle on fewer items with a higher markup or reduce the cost of additional purchases I To find out how much you have left to spend I Cost Balance Total Cost Cost to Date Example I For the previous problem I 288000 112500 175500 Average MU for Balance I This is concerned with the markup on the remaining purchases I Uses the basic AMU formula substituting balance numbers for retail and cost I Is represented by the retail on the balance minus the cost on the balance or MU for balance divided by the retail for balance AMU forthe Balance I You can find the markup on the remaining purchases by using the following equation Retail Balance Cost Balance AMUforBalance 100 Reta11 Balance Example I Mr Evans the gift department buyer has 4400000 to spend at cost for the coming season He has already ordered 21500 in merchandise that will have an average markup of 44 His departmental markup goal is 46 What is the lowest markup he can allow if he wants to attain this goal HINT I When working story problems to find AMU for Balance I Step 1 Find Total R and Total 0 I Step 2 Find the to date R and 0 I Step 3 Find the balance for R and 0 I Step 4 Find the AMU forthe balance I Be certain to look over cost for balance and AMU for balance problems in the book Proportioning items to avoid customer confuswn I Easier on the book keeping also I Stores often have a reputation based on a single price line I Not all items are offered at the same cost I Can offset higher costs with lower costs to determine a mix or average that meets goals I It is desirable to have a single retail price on I The trick I How much should I buy at each cost I Proportioning allows the buyer to determine a ratio based on a weighted average I Formula High CAverageC NL INH AverageCLowC Example I The boy s department has a 595 price line for Tshirts One vendor supplies them for 301 and another for336 In what proportions must the Tshirts be purchased to attain an average markup goal of 47 l The same concepts apply to differing retail prices from a single cost Why Inflation Close out purchases Formula Review Sheet Individual Markup Equation 11 Page 3 The Basic RMC Relationship RetailCost Markup MarkupRetail Cost Cost Retail Markup Equation 21 Equatilm 15 Page 5 Page 10 Finding the RMU CMU CMU 7 RMU 39 Marku Cost Markupi 00 Reta11 P 1 00 RMU Markl1p 100 4 CMU Markup 100 Reta11 Co t markup Cost W 1000 Reta11 RMU 100 CMU 0 Equation 13 Equation 16 Page8 Page 1 Dollar Retail when Cost and RM U are Additional M W WP known Additional Markuplncreased Retail Cost Previous Retail J Retail 100 Complement of RMU Use Equation 13 to nd the Retail Equation 14 Page 8 Cost from RM U 0 CostRetail Complement of RMU A 100
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