Under this system an agreement is done between the buyer and the supplier to provide a required quantity of specified items, over a period of time, usually for one year, at an agreed price.This system minimises the administrative expenses and is useful for 'C' class items for which rigid controls are not required. Deliveries are made depending upon the buyer’s needs. The system relieves the buyer from routine work, giving him more time for focusing attention on high value items such as 'A' and part of 'B' class. It requires fewer purchase orders and thus reduces clerical work. It often achieves lower prices through quantity discounts by grouping the requirements. The supplier, under the system, maintains adequate inventory to meet the blanket orders, but he does not incur selling costs, once the negotiations are finalised.