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Practitioner · Course 1: Allocation Fundamentals · Lesson 2 of 5

Allocating a season's first shipment across stores by their own selling potential

Level: PractitionerTime: 50 minutesOrder used: A (the T-shirt, Delta Garments' own export shipment packed against Fairway Stores' store-level allocation)Tool: Store allocation worksheet
For a factory merchandiser packing a retailer's store-level allocation, and the buyer who builds it. You need lesson T21-C01-L01. Figures are teaching examples in US dollars.
RetailerFairway Stores, 4 representative stores
Export orderOrder A, first shipment of 1,000 pieces
Selling potential usedEach store's own weekly sales rate, comparable style
Total weekly selling potential50 pieces per week, across the 4 stores
FactoryDelta Garments, Mona the merchandiser
What this lesson measuresHow much each store's own selling potential earns it
02Opening

This page explains how to split a confirmed first shipment across stores using each store's own selling potential

This page is for a factory merchandiser who receives a retailer's own store-level allocation instructions and must pack and label cartons against them, and for the buyer who has to build that allocation before it ever reaches the factory. At work, a merchandiser who receives only a total shipment quantity and a store list, with no store-by-store split, cannot pack a single carton correctly. This lesson mainly teaches the product flow: it shows how a shipment quantity is physically split into store-specific cartons, using each store's own selling potential as the basis for the split.

Fairway Stores has a 1,000-piece first shipment of Order A ready to leave Delta Garments' factory, and four representative stores waiting for their own share. Without a selling-potential-based allocation, Mona, the merchandiser packing this shipment, has no way to know that the flagship store should receive far more cartons than the smallest of the four; a wrong split reaches every store already boxed and labelled, and re-sorting stock after it lands is slow and costly.

03Before you start

What you need, and what this lesson does not cover

You need: lesson T21-C01-L01, which shows what allocation decides that open-to-buy and a season plan do not.

By the end of this lesson you can:

  • calculate each store's own selling potential share from its past weekly sales rate;
  • allocate a shipment quantity across stores in proportion to each store's own share;
  • pack and label store-specific cartons from a completed allocation table;
  • explain why a first shipment with no sales history of its own borrows a comparable style's own past rate;
  • check that an allocation's own store totals add back up to the full shipment quantity.

Not covered here: choosing between allocation methods such as even spread, size curve or store cluster, covered in lesson T21-C01-L03, and reading real sell-through to decide where a later shipment goes, covered in lesson T21-C01-L04.

04Key terms

Words you will meet in this lesson

TermMeaning
Store allocationSplitting a confirmed shipment quantity across a retailer's own stores or shops, rather than shipping it all to one central point.
Selling potentialAn estimate of how much a specific store is likely to sell, usually built from that store's own past weekly sales rate for a similar style.
Allocation ratioEach store's own selling potential expressed as a share of the total selling potential across all stores receiving the shipment.
Weekly sales rateThe average number of pieces of a style sold in one week, found by dividing total pieces sold by the number of weeks elapsed.
Comparable styleA previously sold style similar enough to a new one that its own past sales are used to estimate the new style's own selling potential.
CartonA packed unit of stock labelled for one specific store, built directly from that store's own share of an allocation.
05Teaching
The rule

A store's own share of a shipment is set by its own share of the total selling potential, not by an equal split

Selling-potential allocation gives each store a share of a shipment equal to that store's own share of the total selling potential across every store receiving the shipment. A store responsible for 40% of the total selling potential across the group receives 40% of the shipment, not an equal one-quarter, one-tenth, or whatever an equal split across the store count would produce. This keeps stock concentrated where it is most likely to sell quickly, rather than spread according to store count alone.

Fairway Stores' flagship store's own allocation ratio: 20 / 50 = 40%
What you meet in real life

Selling-potential allocation looks different depending on whether the style has its own sales history yet

What can differThe shapes you will meetWhy it matters
Export first shipment, Make to OrderDelta Garments packs Order A's own first 1,000-piece shipment against Fairway Stores' allocation, built from a comparable style's own past weekly sales rate.With no sales history of its own, the allocation is only as good as the comparable style chosen; a poor match risks a wrong split from the very first shipment.
Domestic Make to Stock reorderA domestic retailer such as Cedar & Co. allocates a reorder across its own 12 shops using each shop's own real, recent sell-through instead of a comparable style.Once real sales data exists, allocation no longer needs to borrow from a different style, and the ratios can shift as actual demand becomes clearer.
Hybrid model, later reorderA first batch uses estimated selling potential; once real sell-through exists, a later reorder switches to each store's own actual results.The allocation ratios calculated in this lesson are not permanent; they are recalculated once better information exists.
A style with very uneven store selling potentialA style aimed at a specific customer profile can concentrate most of its selling potential in only one or two of a retailer's own stores.A selling-potential allocation can legitimately send most of a small first shipment to very few stores, which can look wrong to someone expecting an even spread.
The case we follow

Delta Garments packs Fairway Stores' 1,000-piece first shipment into four store-specific cartons built from each store's own selling potential

Fairway Stores has four representative stores receiving Order A's own first shipment: a flagship store, a large store, a mid-size store, and a small-format store. Using each store's own weekly sales rate on a comparable T-shirt style last season, the total selling potential across the four stores is 50 pieces per week, made up of 20, 15, 10 and 5 pieces respectively. Mona uses these four shares to split the 1,000-piece shipment before a single carton is packed.

Fairway Stores' first shipment, 1,000 pieces, split by selling potentialFlagship store: 400 (40%)Large store: 300 (30%)Mid-size store: 200 (20%)Small store: 100 (10%)
Each store's own carton size matches its own share of the group's total selling potential, not an equal quarter of the shipment. The flagship store, with 40% of the selling potential, receives 400 of the 1,000 pieces; the small-format store, with 10%, receives 100.
The worked number

The flagship store's own allocation ratio of 40% earns it 400 of the shipment's 1,000 pieces

Flagship plus large store selling potential: 20 + 15 = 35 pieces per week
Mid-size plus small-format store selling potential: 10 + 5 = 15 pieces per week
Total selling potential across all four stores: 35 + 15 = 50 pieces per week
Flagship store's own allocation ratio: 20 / 50 = 40%
Flagship store's own share of the shipment: 1,000 x 0.40 = 400 pieces

Mona repeats the same method for each remaining store: the large store's own ratio of 15/50, or 30%, earns it 300 pieces; the mid-size store's own ratio of 10/50, or 20%, earns it 200 pieces; and the small-format store's own ratio of 5/50, or 10%, earns it 100 pieces. The four cartons, 400, 300, 200 and 100 pieces, add back up to the full 1,000-piece shipment.

The method

Five steps to allocate a shipment across stores by their own selling potential

  1. Gather each store's own selling potential, usually a comparable style's own past weekly sales rate.
  2. Sum the selling potential figures across every store receiving the shipment.
  3. Divide each store's own selling potential by that total to find its own allocation ratio.
  4. Multiply the shipment quantity by each store's own ratio to find its own carton size.
  5. Check that every store's own carton size, added together, equals the full shipment quantity.
  6. Record the finished allocation table before packing begins, so the factory works from one confirmed set of numbers rather than a verbal instruction that can be misheard or mistyped along the way.
The trap

A common mistake is rounding each store's own carton size without checking the total still matches the shipment

A common mistake is a merchandiser rounding each store's own calculated carton size to a convenient packing number, such as a full case quantity, without then checking that the rounded totals still add up to the full shipment. Order A's own first shipment of 1,000 pieces splits cleanly into 400, 300, 200 and 100 pieces because the underlying ratios were chosen to divide evenly, but a real shipment with less convenient ratios can round to a total a few pieces above or below the confirmed shipment quantity, leaving either unpacked stock sitting at the factory or a shortfall discovered only once cartons are already sealed.

Rounded cartons checked against the shipment totalChecked: 400 + 300 + 200 + 100 = 1,000 pieces, matches shipmentMatchesUnchecked rounding: 398 + 299 + 199 + 100 = 996 pieces, 4 short4 unpacked
A checked allocation confirms the rounded cartons still add up to the full shipment. An unchecked rounding can leave a handful of pieces unpacked, or double-counted, without anyone noticing until stock is missing at a store.
06In plain words

To split a shipment fairly across stores, first work out how much each store is likely to sell compared with the others, using a similar style's own past sales if the new style has none of its own yet. Give each store that same share of the shipment. A store responsible for four-tenths of the total selling potential should get four-tenths of the pieces, not an equal slice just because there happen to be four stores. Always add the store totals back up to make sure they equal the whole shipment before anything is packed.

07Quick check
  • A store's own allocation ratio is its own selling potential divided by the total selling potential across all stores receiving the shipment.
  • A store's own carton size is the shipment quantity multiplied by that store's own allocation ratio.
  • A first shipment with no sales history of its own borrows a comparable style's own past weekly sales rate.
  • Selling-potential allocation can legitimately send most of a shipment to very few stores if their own potential is concentrated there.
  • Every store's own carton size, added together, must equal the confirmed shipment quantity.
  • Rounding carton sizes for convenient packing must always be checked against the full shipment total afterward.
08Workplace scenario

Mona must pack Fairway Stores' first shipment into four cartons before Delta Garments' truck leaves for the port

Fairway Stores has sent Delta Garments its own allocation ratios for the four representative stores receiving Order A's own first shipment: 40%, 30%, 20% and 10%. The shipment itself is 1,000 pieces, and Mona must pack and label one carton per store before the truck leaves for the port this afternoon.

Allocation instruction received. "Order A, first shipment, 1,000 pieces. Flagship store: 40% of shipment. Large store: 30%. Mid-size store: 20%. Small-format store: 10%. Pack and label one carton per store."

How many pieces does the mid-size store's own carton need? Decide before opening the answer.

Show decision

200 pieces. The mid-size store's own allocation ratio of 20% is applied directly to the shipment total.

First, the shipment total is confirmed at 1,000 pieces, the figure both Delta Garments and Fairway Stores agreed against the WSSI in the previous lesson's own decision chain.

Second, the mid-size store's own allocation ratio is 20%, meaning 1,000 x 0.20 = 200 pieces.

Mona packs 200 pieces into the mid-size store's own carton, then confirms all four cartons, 400, 300, 200 and 100 pieces, add up to the full 1,000-piece shipment before the truck is loaded.

09What it costs

What an unchecked rounding error in this shipment would cost Fairway Stores

Using this lesson's own illustrative figures:

Confirmed shipment total: 1,000 pieces
Sum of four cartons if rounded without checking: 996 pieces
Pieces left unpacked at the factory: 1,000 - 996 = 4 pieces

Four pieces left unpacked at Delta Garments looks trivial on its own, but at Fairway Stores' own shop price of USD 19.90 per piece, those four pieces represent USD 79.60 of sales that cannot happen at any store until someone notices the shortfall and arranges a separate, smaller shipment to correct it, an avoidable delay entirely caused by skipping the final check step in the method above.

10Working template

Store allocation worksheet: calculate each store's own carton size from its own selling potential

Open the course workbook's "Selling potential allocation" sheet. Enter each store's own weekly sales rate; the sheet then calculates each store's own allocation ratio and carton size automatically, and flags any rounded total that does not match the confirmed shipment quantity.

[Download the Store allocation worksheet](../../templates/T21-C01-store-allocation-worksheet.xlsx)

Download the Store allocation worksheet (Excel)

11Check yourself

1. How is a store's own carton size calculated from its selling potential?

2. Four stores have weekly sales rates of 30, 20, 10 and 10 pieces on a comparable style. What allocation ratio does the store with a rate of 10 pieces receive?

12Glossary
ENARFRTRMeaning
Store allocationتوزيع المحلاتRépartition entre magasinsMağaza tahsisiSplitting a confirmed shipment quantity across a retailer's own stores or shops, rather than shipping it all to one central point.
Selling potentialإمكانية البيعPotentiel de venteSatış potansiyeliAn estimate of how much a specific store is likely to sell, usually built from that store's own past weekly sales rate for a similar style.
Allocation ratioنسبة التوزيعRatio de répartitionTahsis oranıEach store's own selling potential expressed as a share of the total selling potential across all stores receiving the shipment.
Weekly sales rateمعدل المبيعات الأسبوعيTaux de vente hebdomadaireHaftalık satış oranıThe average number of pieces of a style sold in one week, found by dividing total pieces sold by the number of weeks elapsed.
Comparable styleطراز مماثلModèle comparableKarşılaştırılabilir modelA previously sold style similar enough to a new one that its own past sales are used to estimate the new style's own selling potential.
CartonكرتونةCartonKoliA packed unit of stock labelled for one specific store, built directly from that store's own share of an allocation.
13Next

Lesson 1.3: Choosing an allocation method: even spread, size curve, or store cluster

You now know how to allocate a first shipment across stores by their own selling potential. The next lesson shows the other allocation methods available and when each one actually fits. Back to the course map

14Ladder

RecognizeTell a selling-potential allocation ratio apart from an equal split across stores.
ConnectSee how each store's own weekly sales rate becomes an allocation ratio, and then a carton size.
CompareWeigh an evenly spread shipment against one concentrated in a store's own high selling potential.
DecideJudge how many pieces a specific store's own carton needs from its own allocation ratio.