| Busine

Financial controls |
canhelp to plan |
retail inventory

In our last column, we discussed ways
of keeping close physical control of in-
ventory. Physical controlis always
knowing what merchandise is in stock,
what is on order and what has been sold.
_ Financial control of inventory is in

two parts. The first part is the prepara-
tion of a dollar merchandise plan which
m integrates planned sales to merchandise
= A SSe on a monthly basis and is usually ex- -
wu tended over.a six-month period.
Maranon Hart With such a plan for guidance, the _
Federal Business retailer is able to match merchandise to
Development Bank _anticipated sales. This helps the retailer
avoid both over and understocking. It
also helps the retailer decide how much merchandise can be af-

forded. : .

~ The first step towards implementing a dollar purchase plan is
to draw up a merchandise budget plan, Let’s say the plan is for funs from Dec. 8 to Jan. 3.

the next July to December period. The retailer first puts down .

. what was bought, what was sold, month by month over the same

period last year. To this is added what the retailer hopes to sell,

again month by month, in the same period in the current year. .

- To these data, calculated at cost, is added the amount of stock

that must be on hand at the opening of each month if the plan-

ned targets are to be reached. The amount of opening stock will

depend on the planned sales for the previous month, seasonal ; ; — d and Pa c,
trends, sales promotions and related considerations. a e e

- Finally, the retailer adds purchases, which are determined: by ; a

subtracting planned sales from opening stock, plus or minus the Definitel not 7
difference between planned opening and closing stocks. a en |
_ The merchandise budget plan provides the base for projecting — pT ; a _

- what must be bought to support projected sales. There remains .

only to add the actual sales month by month to complete the _ . 5 a
record. oo | of. : | . /

$6 Beat _

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aor pene re

The annual CounterAttack campaign doesn’t officially start until tomorrow, but local RCMP
_ started warming up for it last week with a mid-afternoon roadblock at the bottom of Lanfear
hill. The joint RGMP-ICBC project to discourage Intoxicated drivers during the holidays

The preparation of a merchandise budget plan will enable the
‘retailer to'calculate the sales-to-stock ratio by dividing planned . . . a .
sales for each month into planned“opening stock. Supposing «~~ | moe Benn ae ve to ee |

_ planned opening stock is $68,750 and planned sales $21,260,
sales-to-stock ratio will be 3.2 or, to put it simply, inventory will

BC. food -

be 3.2 times sales. _ _ In a single _

_ Sales-to-stock ratio is useful for quick comparisons with .

previous experience. If the ratio appears too high, planned pur- ~~ generation manufacturers,

chases might be reduced or, alternatively, greater effort made to Rogers Foods of Rogers is part of

increase projected sales. =. = | Armstrong has the “Great Taste

- The merchandise budget plan will also enable the retailer to turned its local ”

calculate turnover. This is done by adding the opening stock for q ad | of BC , an h

‘each of the six months and the closing stock for the sixth month, our an cerca Industry wit ae

and dividing by seven (number of months plus one)). mill into a $13 more than $3.3 . ig
This figure, in turn, is divided into the total of planned sales million business billion in sales 7

‘over the six month period. Suppose the answer is two. That will |

mean the retailer plans to turn over stock twice over the six at home and

with sales as far

month period. Turnover rate is another basis for comparison afield as Africa, abroad. Mixing
with previous experience. oo South America home grown
in we said at the beginning, thete are two atts te and China. In fact, goodness with
merchandise plan. In our next column, we'll look at the second Rogers accounts pes renee es international
part, the “‘open-to-buy” part. for 55 per cent of . sales, it’s British
: Canada’s flour sales to Hong Kong. Columbia’s recipe for success.
. For Alfred and Pauline Rogers who For more information about B.C’s
= started the business in the 1950s, it’s apriculture industry, contact your MLA,
Jonsered Sup er 67 0 | still very much a family affair with your nearest Government Agent, or
eB son.Stan developing a new line of write to the Hon. John Savage, Minister
: I | k €$ 0 f? | t A Ee diversified food products. of Agriculture and Fisheries, Parliament

Together with more than 400 other Buildings, Victoria, BC. V8V 1X4.

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