Base Turn Rate
During a store's first year on Retail Toolkit's platform, our Open to Buy tool gathers data on inventory like sales history and inventory levels. After this first year, the tool's recommendations are optimized by calculating turn rates dynamically for each category, in an effort to maximize the GMROI of those items.
Until Dynamic Turn Rates are possible for a store's account, Static should be selected which uses the default turn rates below.
Default Minimum/Maximum Inventory (turns)
These are the default turn rate used in the OTB calculations as it determines the minimum and maximum of the OTB range. While it may seem counterintuitive that the maximum turns are a lower number, and the minimum turns are higher, these are correct.
Imagine that during one year, your store has sold $100,000 worth of accessories. If you turn over that inventory four times during that year, your average quantity on hand would be $25,000. If you turn over that inventory five times during that year, your average quantity on hand would be $20,000.
If the turn rate settings were five at a minimum and four at maximum, the OTB min/max range might be calculated as $20,000-$25,000.
If the turn rates (annual sales divided by average quantity on hand at cost) for all categories are averaged together to be nine turns per year, you might choose to set the recommended minimum based on ten turns and the maximum based on eight turns.
This setting allows you to determine if the min/max range is based on the algorithm's calculations around the target, or simply based on a standard min/max.