FMM 114: Final Project Guidelines and Grading Guide

Overview The final project for this course is the creation of a six-month buying plan that includes three components: a dollar plan, a stock plan, and a final merchandise- buying plan with an executive summary and retail store overview. Based on the knowledge obtained in the course, you will develop a comprehensive buying plan for a fictitious retailer, the University Boutique. The successful completion of this project will require you to incorporate information provided throughout this course. The project is divided in to three milestones, which will be submitted at various points throughout the course to scaffold learning and ensure quality final submissions. These milestones will be submitted in Modules Five, Six, and Eight.

Format Milestone One: Dollar Planning

In 5-2 Dollar Planning, you will submit a word document containing all sections of the milestone. This is required but not graded. This is submitted for formative feedback from the instructor.

Milestone Two: Stock Planning

In 6-2 Stock Planning, you will submit a word document containing all sections of the milestone. This is required but not graded. This is submitted for formative feedback from the instructor.

Milestone Three: Merchandise-Buying Plan

In 8-2 Merchandise-Buying Plan, you will submit the completed plan. It should be a complete, polished artifact containing all of the main elements of the final product. It should reflect the incorporation of feedback gained throughout the course. This milestone will be graded using the Final Product Rubric.

Deliverable Milestones

Milestone Deliverables Module Due Grading

1 Dollar Planning 5 Required but not graded; formative feedback from instructor

2 Stock Planning 6 Required but not graded; formative feedback from instructor

3 Final Product: Merchandise-Buying Plan 8 Graded separately; Final Product Rubric

Main Elements The final project should include the following sections:

 Cover page

 Executive summary

 Retailer overview

 Dollar plan

 Stock plan

 References

Milestone One: 5-2 Dollar Planning

Assignment Overview

As the merchandise buyer for the University Boutique, you have been given the task of developing the six-month buying plan for the coming

fall/winter season. To get started you will begin by planning sales, beginning-of-month stock, reductions, and purchases.

This assignment is divided into four sections, one for each part of the dollar plan. For each section, read the information provided to assist you in

completing the tables.

You MUST fill in all empty spaces in each table.

Calculating Planned Sales

When planning sales, merchandise buyers must consider factors such as current sales trends, economic conditions, fashion trends, and the retailer’s

past sales performance. However, in many instances the merchandise buyer does not establish his or her own sales goals. It is management who

decides the amount of profit that is needed to continue running the business successfully. Therefore, the sales goal for the University Boutique for

this six-month buying period is $2,840,000.

Complete the table by calculating the planned sales for each month using the formula provided: Planned sales = Each month’s % x Total planned

sales

Example: To calculate August’s planned sales, multiply 17% by $2,840,000 = $482,800.

August September October November December January Totals

Planned Sales

482,800 2,840,000

Planned Sales %

17% 15% 15% 18% 19% 16% 100%

Calculating Planned Reductions

Markdowns, employee discounts, customer allowances, and sales promotions all fall under the category of reductions. These figures must be

factored into the dollar plan because they affect inventory levels. Merchandise buyers understand that retailers become profitable through

advertising and promotion, which is established by marking down merchandise to encourage sales.

Calculate the total reductions for each month at the University Boutique.

 The first thing the merchandise buyer must do is establish the reduction percent for each month. The reduction percent is based on sales,

special events, and holiday promotions that will occur during each month. The months where a major holiday is celebrated typically have a

higher reduction percent (e.g., Halloween, Thanksgiving, Christmas, etc.).

 The total reduction percent must equal 100% for all six months. Five of the months already have an established reduction percent so to find

the last percent, add up the five percentages and subtract the total from 100%.

 Once you have all the reduction percentages for each month, use this formula to calculate the reduction dollar: Planned sales x Reduction %

= Reduction $

August September October November December January Totals

Planned Sales

482,800 2,840,000

Planned Reduction $

77,248 477,120

Planned Reduction %

16% 14% 18% 19% 18% 100%

Calculating Planned BOM Stock

A major part of the dollar plan is the relationship between stock and sales. At this point you have established what your sales goals are for each

month. Now, you must plan enough stock to meet sales, as well as maintain a fully stocked store without overstocking. When planning inventory,

every merchandise buyer’s goal is to maintain adequate merchandise and regulate the stock (i.e., amount of money the retailer invests in its

inventory) in relation to sales to maintain a balance between the two.

Merchandise buyers usually plan monthly stock figures for each month of the dollar plan. The inventory figures are recorded at the retail value. This

means the inventory (BOM stock) totals are listed at the amount the retailer would sell the inventory for (i.e., the retail price).

The stock-to-sales (S-S) ratio varies from month to month, depending on the events that occur each month, including holidays, store promotions,

sales, and special events. When the merchandise buyer plans S-S ratios for each month, he or she uses the S-S ratios from the previous year for the

same season as well as industry standards to determine what the planned ratios should be. The University Boutique has already established what

the S-S ratios will be for this season’s planning.

Using the table below, calculate and fill in the BOM stock for each month using the following formula: Planned sales x S-S ratio = BOM stock

August September October November December January Totals

Planned

Sales 482,800 2,840,000

S-S Ratio 2 1.5 1.5 2 2 2 11

BOM

Stock 5,254,000

Calculating Planned Purchases

At this point you have completed your planned sales, planned reductions, and planned BOM stock figures. Now you will use all these figures to

determine the retail and cost planned purchases.

In the table below, calculate and fill in the planned sales, EOM stock, BOM stock, and reduction figures for each month. Use the appropriate figures

that have been calculated in the previous tables.

 To calculate planned purchases @ retail use the following formula:

PL Purchases @ Retail = PL Sales + PL EOM + PL Reductions – PL BOM

 To calculate planned purchases at cost use the following formula:

PL Purchases @ Cost = PL Purchases @ Retail x (100% – MU%)

Note: The University Boutique has an established MU% of 60% for all merchandise. The boutique’s goal is to gain a 60% profit on all merchandise

sold in the store; by multiplying planned purchases @ retail by the markup complement (e.g., 100% – MU%) the buyer will know exactly how much

merchandise to purchase for each month to meet that month’s sales goal.

 Calculate the totals for each row by adding across.

Just as BOM stock figures in the dollar plan are valued at their retail price, so are the planned purchases @ retail. This allows the buyer to see how

much profit could be generated in each month of the season in relation to how much it would cost to purchase the merchandise that is planned for

each month. Planned purchases @ cost shows the buyer how much would need to be spent on the merchandise that would be purchased for each

month.

Note: One month’s end-of-the-month (EOM) stock is the same as the next month’s BOM stock. For example, if a retailer closed its store on

September 30 (the last day of the month) with inventory levels amounting to 639,000 (September EOM stock), the same figure (639,000) would

also represent October’s BOM stock figure the next day when the retailer opened on October 1.

Example: August’s EOM stock of 639,000 also represents September’s BOM stock figure. This example will be helpful when completing the planned

EOM stock row.

August September October November December January Totals

Planned Sales 482,800 2,840,000

Planned EOM

Stock 639,000 875,667 5,164,067

Planned

Reductions 77,248 477,120

Planned BOM

Stock 965,600 5,254,000

Planned

Purchases @

Retail

233,448

Planned

Purchases @

Cost

93,379.20

Milestone Two: 6-2 Stock Planning

Assignment Overview

Now that you have completed the dollar plan it is time to begin planning the University Boutique’s merchandise assortment. Stock planning is an

important component of the six-month buying plan because it outlines exactly what type of merchandise will be sold. Therefore, as the

merchandise buyer for the University Boutique, you must decide what styles, colors, fabrics, prints, and sizes will be carried in the store and at what

price point the merchandise will be sold for the coming season.

This assignment is divided into three sections, one for each component of the stock plan. Read the bulleted information provided in each section to

assist you in completing the tables.

Identifying Classifications and Sub-Classifications

Developing a stock plan entails identifying the retailer’s classifications, sub-classifications, and their characteristics (e.g. colors, fabrics, sizes, and

price points). As the buyer for the University Boutique, you must develop a new classification plan for the store that includes classifications, sub-

classes, class sales, and percentages. Complete the table by filling in your chosen classes and sub-classes.

 The University Boutique is a fashion-forward retailer that carries juniors and misses apparel. The boutique is located in proximity to a college

campus full of young students, staff, and faculty. You must choose seven classifications for the University Boutique. Your choices should be

based on the type of customer that you believe the University Boutique should target, according to what they are likely to buy.

 Identify four sub-classifications for each of the seven classifications you have listed. Note: A classification is a merchandise category (e.g.,

sweaters, outerwear, jeans, dresses, accessories, sleepwear, pants) and sub-classifications are specific styles of a merchandise category (e.g.,

sweaters: cardigans, pullovers, ponchos, tunics).

1. Classification

Name

5.

Classification

Name

Sub-classes

Sub-classes

2. Classification

Name

6.

Classification

Name

Sub-classes

Sub-classes

3. Classification

Name

7.

Classification

Name

Sub-classes

Sub-classes

4. Classification

Name

Sub-classes

Now that you have finished identifying all the classifications and sub-classifications for the University Boutique, provide a 250-word justification in

the space provided below. Explain why you believe the classifications and sub-classifications you have chosen are the best merchandise assortment

for the retailer.

Justification:

Calculating Classification Sales

Classification sales figures provide the buyer with an idea of how much money is expected to be generated from each merchandise category. In

order to determine the potential sales generated from each classification, the buyer must consider which will sell the most, which will sell a

moderate amount, and which will sell the least. This is based on the buyer’s fashion forecasting research for the season and past experiences.

Complete the table by calculating the sales for each classification.

 After considering what classifications you would like your merchandise assortment to consist of, distribute 100% among the classifications

based on what you believe the percentage of sales each classification would achieve.

 Establish a class percentage for those classifications without a percent. Remember, the total cannot exceed 100%.

 Multiply each class percentage by total planned sales to determine classification sales in dollars for each class. Formula: Classification Sales =

Total PL Sales x Class %

Classification Name Class Percentage Total Planned Sales Classification Sales

17%

2,840,000

(multiply all percentages by

Total Planned Sales)

482,800

20%

13%

10%

100% 2,840,000

Assortment Planning by Color, Fabric, Size, and Price Point

As the stock plan is developed, a merchandise assortment for each classification must be established by providing additional characteristics of each

classification, including colors, fabrics, sizes, and price points. As a merchandise buyer consider the following questions:

 What colors, fabrics, and sizes do I think will sell well in this classification?

 What retail prices do I think the boutique’s target customer would be willing to pay for the merchandise in this classification?

Once you have considered these questions, complete the assortment planning table.

 Choose one classification and complete the table. Do not choose shoes or accessories to complete the assortment plan.

 Determine the color, fabric, size, and price point characteristics that will be represented in the merchandise assortment for the classification

you have chosen. Fill in all empty spaces in the table.

 For each classification characteristic (color, fabric, size, and price point) determine the percentage that will be allocated to each. The total for

each separate characteristic must equal 100%. Remember, you are distributing 100% among each characteristic based what you expect the

University Boutique’s target customers to buy during the season.

Assortment Plan for ______________ Classification

Sub-classifications

Sub-classifications % to Stock

100%

Colors

Colors % to Stock

100%

Fabrics

Fabric Content % to Stock

100%

Sizes

Sizes % to Stock

100%

Price Points % to Stock

Price Points

100%

Now that you have completed the table, provide an overall justification. Write a 250-word justification explaining why you, as the buyer for the

University Boutique, believe the merchandise assortment you have chosen for this classification will be successful in achieving the class sales goal.

Justification:

Milestone Three: 8-2 Merchandise Buying Plan

Assignment Description

You have been hard at work developing the six-month buying plan for the University Boutique, and management is ready to review your plan for

the upcoming season. In this component, you provide a compilation of your complete merchandise-buying plan, including the dollar and stock

plans, along with an executive summary and retailer overview. The merchandise buying plan should contain the following sections:

 Cover page

 Executive summary

 Retailer overview

 Dollar plan

 Stock plan

 References

Executive Summary

The executive summary should provide the University Boutique with the overall vision that you have established for the upcoming season. This

must include your justifications for PL sales, PL reductions, PL BOM stock, and PL purchases. The justification should explain how you plan to meet

your sales goals, how reductions (e.g., sales promotions, markdowns, advertising) will be used to facilitate the sale of the merchandise, how BOM

stock is a sufficient amount of inventory for each month, and how purchases will be used to bring in desirable merchandise to meet consumer

demands. The minimum word count for the executive summary is 250 words.

Retailer Overview

The following topics should be discussed in this section:

 University Boutique’s target market: Explain what consumer group(s) you believe the retailer should target and include the demographic

and psychographic information.

 University Boutique’s merchandise assortment: Explain why you believe the merchandise assortment you have planned is suitable (e.g.,

lifestyle, fashion taste) to the target market you have identified.

 University Boutique’s pricing strategy: Explain what pricing strategy you plan to use for the upcoming season and how it will entice

consumers to buy while simultaneously generating profit for the retailer.

The minimum word count for the retailer overview is 500 words.

Dollar Plan

Use the figures from the Module Five dollar plan.

August September October November December January Season Totals

Planned Sales 2,840,000

Planned % of Season 17% 15% 15% 18% 19% 16% 100%

Planned Reduction $

Planned Reduction

% 16% 14% 18% 19% 18% 100%

Planned BOM Stock

Planned S-S Ratio 2 1.5 1.5 2 2 2 11

Planned Purchases

@ Retail

Planned Purchases

@ Cost

Use the formulas provided to calculate season turnover and average stock. When calculating average stock and turnover, answers should be

rounded to the nearest whole number.

 Average Stock: BOM Stock for Aug through Jan + Jan EOM

# of Inventories (7)

 Turnover: Total PL Sales / Average Stock

Initial Markup % 60%

Season Turnover

Average Stock

Stock Plan

Use the data from the Module Six stock plan. Complete sub-classes, colors, fabrics, sizes, and price points for only one classification, as with your

Module Six submission.

Classification

Name

Class Sales

Percentage

Class Sales

Total Sub-Classes Colors Fabrics Sizes Price Points

Final Project Ru