Stock Planning

Stock planning is done through ABC Analysis. It is so named because each item of the material to be planned is described as A, B or C. Item A are those items which are carefully planned for their procurement. The cost of these items may he as large as 75% of total money spent on acquiring such stock while they may form just  about 10% of the total number of stock items. In other words, a small percent of the total  in stock represent a large percent of the total expenditure on stock during the year. For such items, schedules for receipt are prepared on weekly or daily basis, to keep the investiture in inventory as low as possible. Items under category B are of secondary importance not requiring as detailed a planning and as precise a control as items under A. These items amount to 15-2055 of the total expenditure on purchase of stock while representing 10-2095 of the total number of items in the inventory. Items under category C are of those which add up to 5-10% of the cost of the total inventory while representing 70%; of the total number of items in stock. Such items may be purchased in large Numbers stocked to minimize time and effort required by the stores personnel. The cost of these items being low, the inventiveness in their acquisition is not high while sufficient stock ensures that construction  activity would not be affected for want of them. The manner of control of such items is opposite to that prescribed for items under A. 

The ABC analysis indicates the relative care taken in planning the procurement of the three types of' spare pacts. Shrill stocks of A items are desirable to keep the investment in inventories low, while, for C items the reserve quantity should be large. Items under B are treated as intermediate between A and C items.