items are identified and listed periodically in each
Plant for the convenience of all the users. These
items are grouped under various commodities like
fasteners, Hardware items, Electrodes, Cables etc
based on the nature of these items.
Monitoring of Planning, indenting, Stock and issue
of such items are monitored by a central agency
under Materials Management, known as “Stock
Planning of AP items & indent raising -
The Indents for the procurement of AP items are
raised centrally by Stock Control section. For most
of the items the indents are generated automatically
by the computer system based on the trends of past
consumption without involving detailed planning
However special requirement by different users,
additional capital repair requirements are
considered while finalizing the quantity for
Procurement action for APIs
Like any other Inventory replenishment system
,API system also seeks to answer the following
- When to order for replenishment ?
- How much quantity to order and
- What system to follow ?
Some of the
systems followed in the automatic indent generation are
listed below :
Periodic Review System (PRS)
The periodic review system of indent raising is also
known as calendar
based system or Psystem.
In this system, the stock position and consumption trends of
reviewed in a fixed time period and the indent is
generated to cover
the requirement up to the
Usually this review is done annually so
that indents are
raised for annual
Quantity System /
Continuous monitoring / EOQ system
In the continuous monitoring system also known as
Q-System, the stock
position of items are
monitored continuously through the system and the
indents are raised
for the items for which
the stock level has reached a pre-fixed stock level.
indent raising is usually a
fixed quantity in this system known as Economic Order
which is the
quantity to be procured with minimum total cost
+inventory carrying cost
However in practice, the fixed quantity to be
procured is the
annual requirement quantity
and the stock levels (Inventory) is maintained by
Safety Stock, Re-Order Level
As the stock outs of items have adverse effect on the
running of the plant and the
care needs to be taken to ensure
continuous availability of items.
However as the consumption of items and the
supply of the same may vary due to
uncertainties, sufficient stocks of the items are needed to be maintained to take
care of such
variations which is
known as safety stock.
Safety stock is the minimum stock to be maintained to
take care of
stock out situations due to
variation in the consumption as well as supply.
Safety Stock = Buffer Stock to take care of consumption
Buffer stock to take care
of supply variations.
Safety stock of an item is decided based on the
criticality of that
item and uncertainties
involved in the consumption & supply of that item. So
varies for various
categories of items.
Re-Order level (ROL) is the stock level of an item at
procurement activity is
initiated by raising indent so that the items are
received before the
stock out of that item.
ROL = Quantity required for the consumption during the
lead time of
Based on the lead time of procurement of the item & its
requirement, the ROL is
fixed for each AP item.
Monitoring of Stock levels:
The stock levels of the AP items are continuously
monitored by Stock
Control by taking
Exception Reports of items approaching Safety Stock
level, ROL, nil
stock etc. and takes
suitable corrective measures to ensure the timely
availability of AP items.
percentage level of availability of AP items to users
when required is
known as Service Level
of AP items.