Purchasing Lesson 2

Objectives Explain how purchasing impacts sales and profits List qulities of a good buyer Describe the lifecycle of inventory through a store – From ordering to sale Explain the affect of inventory control on sales Calculate stock turnover in terms of items and dollars List common problems associated with purchasing and inventory control

Purchasing What a Buyer Does: – A person who is responsible for purchasing the merchandise for a store Planning: – The buyer must plan which merchandise to buy » Important to know the store’s customers to be able to predict what they will want to buy Timing: – Merchandise must be available when customers want to purchase Negotiating: – Buyers negotiate the terms and discounts of the orders with vendors or suppliers

Selecting Vendors: – Vendor: Is a business from which a buyer purchases merchandise Inventory Needs: – Inventory: The total amount of goods a business has – Referred to as “Stock”

Stock Handling: – Receiving and Checking in Stock: When stock arrives the workers check the items against the invoice – Make sure what was ordered was received – Price Marking Stock: After the stock is checked in it is marked with its selling price – Transferring Stock to the Selling Floor: After the price is put on the stock is moved to the selling floor – Stock Storage: Any stock that cannot fit on the shelf needs to be put in the appropriate storage

Inventory Control: – It is important to control the inventory so that you do not have too much or too little amount of an item Inventory Systems: – Physical Inventory System: The system works by counting all the stock to be certain of the stock levels – Perpetual Inventory System: This system works by keeping track of items that are received and sold to keep

Stock Turnover: – Measures how often stock is sold during a given time period Can be measured in items of stock or in dollars invested

Key Math Concepts Calculating Open-To-Buy – Open-to-buy= Planned Purchases – (Orders Received + Merchandise Ordered) Example, You have planned purchases of $1,000, you have received orders that total $400 and you have ordered merchandise that totals $200. – Open-to-buy = $1000 – ($400 + $200) – Open-to-buy = $400

Computing Stock Turnover: – Stock Turnover in Items = Number of Items Sold + Average Number of Stock Items in inventory – Stock Turnover in Dollars = Dollar Sales of Inventory Items / Average Dollar Value of Inventory Investment