---
title: "Inventory planning and ABC classes from data"
subject: "Construction Management"
chapter: 3
key: "semester_8/construction_management:abc-table-inventory-2077"
source: https://www.bctengineer.com/q/semester_8/construction_management/abc-table-inventory-2077
site: BCT Engineering
---

# Inventory planning and ABC classes from data

Construction Management · Chapter 3: Planning Construction Material

- Asked in: 2077 Chaitra, 2+4+2 marks
- Video: [Inventory Control Technique: ABC Analysis](https://www.youtube.com/watch?v=fzY_wPtPkbM) — WIT Solapur - Professional Learning Community
- Answer checked by Claude Opus 5.5 (high effort) on 2026-10-14
- Page: https://www.bctengineer.com/q/semester_8/construction_management/abc-table-inventory-2077
- Whole chapter: https://www.bctengineer.com/md/semester_8/construction_management/chapter-3

## Question

How can inventory of construction materials be planned for repeatedly used items? Explain with suitable diagram. Consider a construction site acquired different materials given below, based on the data classify the materials in A, B and C classes. What are the significances of this classification?

| Materials | Quantity | Unit | Rate per unit |
|---|---|---|---|
| steel re-bar | 15 | ton | 110000 |
| cement | 600 | bag | 750 |
| tiles | 1500 | sqft | 350 |
| brick | 9000 | no | 12 |
| marbles | 450 | sqft | 250 |
| aggregate | 50 | cum | 1400 |
| sand | 25 | cum | 1200 |

## Short answer

Inventory for repetitive items is planned by ordering EOQ when stock hits reorder level. The ABC classification: A items are steel rebar and tiles (totaling 74% value), B is cement, rest are C. This directs management effort to high-value items, reduces holding costs, and prevents critical shortages.

## Answer

#### Inventory planning for repetitive (regularly used) materials
Materials such as cement, sand and bricks are used continuously, so their stock is kept between a maximum and a minimum level by ordering a fixed economic quantity (EOQ) whenever the stock falls to the re-order level.

```text
 Stock
   ^
Max|\      |\      |\       maximum level
   | \     | \     | \
   |  \    |  \    |  \
ROL|...\...|...\...|...\..... re-order level (order placed)
   |    \  |    \  |    \
   |     \ |     \ |     \
Min|......\|......\|......\.. minimum (safety) stock
   |   <-->|   <-->|
   |    LT |    LT |
   +-----------------------------> Time
 LT = lead time. Stock falls with use; the order placed at
 ROL arrives after LT and raises the stock by EOQ (vertical line).
```
Quantities:
- **Reorder level (ROL)** = daily consumption x lead time + safety stock
- **Maximum level** = ROL + EOQ - (minimum consumption x minimum lead time)
- **Minimum (safety) level** = ROL - (normal consumption x normal lead time)
- **Average stock** = Minimum level + EOQ/2
- **EOQ** = $\sqrt{2DC_o/C_h}$, where $D$ is annual demand, $C_o$ ordering cost per order and $C_h$ carrying cost per unit per year.

Process: estimate consumption from the work schedule, fix the lead time and safety stock, compute the EOQ, place an order at the ROL, check the material on receipt, and review the levels when the rate of work changes.

#### ABC classification of the given materials
Value = quantity x rate.

| Material | Value (Rs) | % of total | Cumulative % | Class |
|---|---|---|---|---|
| Steel re-bar | 16,50,000 | 56.02 | 56.02 | A |
| Tiles | 5,25,000 | 17.82 | 73.84 | A |
| Cement | 4,50,000 | 15.28 | 89.12 | B |
| Marbles | 1,12,500 | 3.82 | 92.94 | C |
| Brick | 1,08,000 | 3.67 | 96.60 | C |
| Aggregate | 70,000 | 2.38 | 98.98 | C |
| Sand | 30,000 | 1.02 | 100.00 | C |
| **Total** | **29,45,500** | 100 | | |

Class limits are taken as A up to about 75%, B up to about 90%, and C the rest. Thus **A: steel re-bar, tiles; B: cement; C: marbles, brick, aggregate, sand.**

#### Significance of classification
- Management attention and control are concentrated on the few A items, which carry about 74% of the value.
- It reduces inventory carrying cost: A items are ordered often in small lots, C items in bulk.
- It helps in selecting suppliers and in negotiating for A items.
- It reduces the chance of a shortage of critical items.
- It saves time and effort in record keeping and purchasing.

## Check yourself

The answer's key points as multiple-choice questions, with the correct option and why.

1. How is the value used in ABC classification calculated?
   A. Rate only
   B. Quantity only
   C. Quantity x rate
   D. Quantity / rate
   Answer: C. Annual value = quantity x unit rate, e.g. steel 15 x 110000 = Rs 16,50,000. (Key point: Annual value)

2. With limits A to about 75%, B to about 90%, which materials are class A?
   A. Steel re-bar and tiles
   B. Cement only
   C. Steel re-bar only
   D. Sand and aggregate
   Answer: A. Steel (56%) and tiles (17.8%) reach about 74% cumulative, forming class A; cement is B. (Key point: Result of classification)

3. A main significance of ABC classification is to:
   A. control all items equally
   B. concentrate attention on the few high-value A items
   C. stop buying C items
   D. remove safety stock for all
   Answer: B. Effort is focused where the value is, reducing carrying cost and shortages for critical items. (Key point: Significance)

4. In planning repeatedly used items, stock is kept:
   A. at zero
   B. between maximum and minimum levels, ordering EOQ at the reorder level
   C. above maximum always
   D. unplanned
   Answer: B. A fixed economic quantity is ordered whenever stock falls to the reorder level. (Key point: Stock between levels)

## Related in Construction Management

- [ABC classification and inventory planning](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aabc-inventory-planning-repetitive) — Construction Management, chapter 3, asked 2×
- [Planned maintenance, planning and scheduling](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aplanned-maintenance-scheduling) — Construction Management, chapter 9, asked 2×
- [ABC graph and value engineering of materials](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aabc-graph-value-engineering) — Construction Management, chapter 3
- [ABC classification and material management](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aabc-importance-material-mgmt) — Construction Management, chapter 3, asked 2×
- [Material classification, EOQ, GiT and re-order level](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Aclassification-eoq-gitt-2079) — Construction Management, chapter 3
- [Job layout and site planning factors](https://www.bctengineer.com/question.md?key=semester_8%2Fconstruction_management%3Ajob-layout-site-planning-factors) — Construction Management, chapter 6, asked 2×

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