Fundamentals of Merchandise Planning 3: Inventory Planning

  • Inventory Planning
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Merchandise planning at the most basic level is about

  1. anticipating customer demand, then
  2. planning your inventory needs to meet that demand while
  3. satisfying the company’s financial objectives – to maximize profit.

In this video training mini-series, we cover the second step in merchandise planning. The basic concepts of retail math for inventory planning is explored through workflow typically used in retail by merchandise planning professionals.

If you haven’t already done so, please review the introductory video on MFP and understand retail sales planning before proceeding to the videos below.

The Inventory Balance Set

Learn what a balance set is, the typical metrics and calculations commonly used in a balance set, and the concept of perpetual inventory.

Now that you understand the components of an inventory balance set, let’s look at each of the metrics within the balance set that affect it.

Markdown Planning

Understand the basic concepts of markdowns, know the difference between POS and permanent markdowns and how each impact your inventory valuation.

In addition to markdowns, you may have other inventory adjustments which may affect your balance set.

Inventory Adjustments

In this session we examine a number of inventory adjustments to explore whether they need to be planned.

Once all the inventory metrics are accounted for in the balance set, you can examine your additional purchasing needs.

Receipt Planning

In this session, we explore the concept of receipt planning and how it’s related to your open-to-buy.

Now that you understand the basics of how to plan for customer demand – sales planning, and how to plan your inventory to meet that demand, you can click here to check out some of the performance metrics used in merchandise planning.

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