Operations Management and Strategic Management · Economics of Maintenance and Spares Management

Spares Management and Inventory of Spares

Updated 10 October 2026 · Fact-checked

Spares management is the planning, stocking and control of spare parts so that machines get repaired quickly without locking up too much money. You classify spares by value (ABC), criticality (VED) and movement (FSN), then set stock levels and reorder rules for each class.

Understand Spares Management and Inventory of Spares

A spare part is a component kept ready to replace a worn or failed part in a machine. If a critical spare is missing, the machine stays idle and production is lost. If you hold too many spares, money is blocked, storage cost rises and parts may become obsolete. Spares management balances these two risks.

Spares differ from consumables. A spare replaces a specific part of a specific machine, such as a bearing, gear or motor, and is used only when that part fails or is due for replacement. Consumables such as lubricants, cotton waste, filters or cutting oil are used up regularly in normal running and are bought in routine quantities. Spares demand is irregular and linked to breakdowns and maintenance plans. Consumables demand is steady.

Spares can be grouped in several ways. By use: capital (insurance) spares, which are costly, rarely needed but vital, and rotable spares, which are repaired and reused. Normal (revolving) spares are used routinely and replaced often. By source: bought-out items, or items made in-house. By plant: machine-specific or common to many machines.

Three control techniques are used together. ABC analysis ranks items by annual consumption value: A items are few but carry most of the value, C items are many but carry little. VED analysis ranks by criticality: Vital items cause a stoppage if absent, Essential items cause a loss of efficiency, Desirable items cause little effect. FSN analysis ranks by movement: Fast-moving, Slow-moving and Non-moving items. ABC looks at money, VED at consequence of shortage, FSN at usage rate.

Spares planning starts from the machine list, maintenance plan, past failure data and supplier lead time. You then set stocking policy: tight control and low stock for A items, safety stock for vital items even if they are costly, and review or disposal for non-moving items. Spares with long lead time or single-source supply need extra attention.

Key rules to remember

Annual consumption value: Annual consumption value = Annual usage (units) × Unit price (₹); Used to rank items for ABC analysis. Rank from highest value to lowest, then compute cumulative percentages.
Cumulative % of value: Cumulative % = (Running total of consumption value ÷ Total consumption value) × 100; Typical cut-offs are about 70-80% of value for A, next 15-20% for B and the rest for C. Cut-offs are a guide, not a fixed law.
Reorder level: Reorder level = Maximum usage per period × Maximum lead time; Alternative: Average usage × Lead time + Safety stock. Use the form the question's data supports.
Issue rate for FSN: Consumption rate = Issues during period ÷ Average stock held; Higher ratio means faster moving. Classes are decided by the cut-offs the question gives, or by time since last issue.
ABC, VED, FSN meanings: ABC = value; VED = criticality; FSN = movement; Write the basis of each technique first in any theory answer.

How to solve Spares Management and Inventory of Spares questions

Use this method for any question on spares classification, stocking or control, whether it is theory or numerical.

1Read what is asked: classification, policy, a technique, or a comparison. Note whether the technique is ABC, VED, FSN or a combination.
2State the basis of the technique in one line, for example ABC is by annual consumption value.
3For numericals, compute annual consumption value for each item (usage × price). Do not rank by price alone or usage alone.
4Rank items in descending order of the chosen basis, then compute the percentage of total and the cumulative percentage.
5Apply the cut-offs given in the question. If none are given, state the cut-offs you assume and apply them consistently.
6Present the result in a neat table: item, value, % of total, cumulative %, class.
7Add the policy for each class: control level, safety stock, review frequency, ordering method.
8For theory, close with the cross-link: combine ABC with VED so that a low-value vital item is not under-stocked.

Quickest way: Fast ABC ranking and policy

When to use it: When a numerical gives a list of spares with usage and price and asks for classification under time pressure.

Multiply usage by price for every item and write the values in a column.
Add them to get the total. Compute 70% and 90% of the total as your quick markers.
Sort values from highest to lowest and add up until you cross the first marker. Those items are A.
Continue until you cross the second marker. Those items are B. The rest are C.
For VED or FSN theory, write one line each on definition and stocking policy, then a short combined matrix idea.

Common mistakes in Spares Management and Inventory of Spares

Ranking items by unit price instead of annual consumption value.
Students see the price column first and treat costly parts as A items.
Fix: Always multiply usage by unit price first. A cheap part used in huge numbers can be A.
Mixing up ABC, VED and FSN bases.
The three names look alike and are often learned as letters only.
Fix: Remember: ABC money, VED vital-essential-desirable criticality, FSN movement speed.
Treating VED as a value-based method.
Because costly parts are often vital, students assume the two are linked.
Fix: VED depends on the effect of a shortage on production, not on price. A cheap fuse can be Vital.
Defining spares and consumables as the same thing.
Both are stores items issued to the shop floor.
Fix: Spares replace a specific machine part and are demanded irregularly. Consumables are used up in routine running.
Forgetting cumulative percentages and showing only class labels.
Students rush to the answer and skip the working.
Fix: Show a table with value, percent and cumulative percent. Step marks depend on it.
Recommending the same stock policy for all spares.
Students forget that control should match importance and cost.
Fix: Give separate policy for A, B and C, and note that vital items need safety stock whatever their value.

Worked examples

Example 1

A workshop uses five spares: P (usage 200 units, ₹50 each), Q (100 units, ₹400), R (500 units, ₹10), S (20 units, ₹2,000), T (50 units, ₹20). Classify them under ABC analysis taking A as the first 70% of value, B the next 20% and C the rest. Use one convention for both cut-offs: the item whose cumulative value crosses a cut-off joins the class that the cut-off closes.

Show the solution

Annual consumption value: P = 200 × 50 = ₹10,000; Q = 100 × 400 = ₹40,000; R = 500 × 10 = ₹5,000; S = 20 × 2,000 = ₹40,000; T = 50 × 20 = ₹1,000.
Total = 10,000 + 40,000 + 5,000 + 40,000 + 1,000 = ₹96,000.
Rank descending: Q ₹40,000 and S ₹40,000 (each 41.67%), P ₹10,000 (10.42%), R ₹5,000 (5.21%), T ₹1,000 (1.04%). Q and S tie at ₹40,000, so either order is fine. Whichever comes first, the cumulative after both is 83.33%.
Cumulative %: Q 41.67%; S 83.33%; P 93.75%; R 98.96%; T 100%.
The cut-offs are 70% and 90%. Q is within 70%, so Q is A. S takes the cumulative past 70% to 83.33%, so under our convention S joins A and completes the A group.
P takes the cumulative from 83.33% to 93.75%, so P crosses the 90% line. By the same convention, P joins B and completes the B group.
R (98.96%) and T (100%) lie beyond the 90% line, so they are C.

Answer: A: Q and S (83.33% of value from two items). B: P (10.42% of value). C: R and T (together 6.25% of value). Control Q and S tightly, give P moderate control, and keep R and T on simple, low-effort ordering.

Example 2

A plant keeps three spares. Item X is a ₹800 relay whose absence stops the whole line. Item Y is a ₹25,000 gear that has not been issued for four years and whose machine is still in use. Item Z is a ₹300 filter issued every week. Classify each under VED and FSN and suggest a stocking policy.

Show the solution

X: absence stops the line, so it is Vital under VED. Issues are not stated, so do not classify it under FSN without data.
Y: the question says the machine is in use, so the gear could be needed, but no stoppage effect is stated. Treat it as Essential, to be confirmed with maintenance staff. It has no issue in four years, so it is Non-moving under FSN.
Z: issued every week, so it is Fast-moving under FSN. A filter usually reduces efficiency rather than stopping the line, so Essential, to be confirmed.
Policy for X: keep a safety stock even though its value is low, and check supplier lead time.
Policy for Y: do not reorder routinely. Review the need, and consider keeping one unit as an insurance spare or sharing it with other plants if the machine is critical.
Policy for Z: use a regular reorder level and economic order quantity, as demand is steady.

Answer: X is Vital and needs safety stock. Y is Non-moving and Essential (subject to confirmation), so hold the minimum and review. Z is Fast-moving and Essential (subject to confirmation), so order routinely on a reorder level.

Exam tips

In theory answers, write the basis of ABC, VED and FSN in the first line. Then give classes, then policy.
Show the full ABC table with cumulative percentages. A correct class list with no working loses step marks.
For MCQs, check whether the question asks about value, criticality or movement. The wrong technique is the usual trap option.
When asked the difference between spares and consumables, write at least three points: purpose, demand pattern, link to machine.
If cut-offs are not given, state your assumed cut-offs clearly before classifying.

Practice questions from Economics of Maintenance and Spares Management

Spares Management and Inventory of Spares: frequently asked questions

What is the difference between spares and consumables?

Spares replace a specific part of a machine and are needed when that part fails or is due for replacement. Consumables are used up in routine running, such as lubricants or filters in bulk. Spares demand is irregular, while consumables demand is steady.

How do you classify spares using VED analysis?

Classify by the effect of a shortage. Vital items stop production if missing, Essential items reduce efficiency or cause delay, and Desirable items have little effect. Price is not the basis.

What is FSN analysis in spare parts inventory?

FSN groups items by how fast they move: Fast-moving, Slow-moving and Non-moving. It helps you decide which items need regular ordering and which need review or disposal.

Why combine ABC and VED analysis?

ABC looks only at money and may undervalue a cheap but vital part. Combining it with VED lets you give tight cost control to costly items while still keeping safety stock of vital low-value items.