Hi Adithya,
We have the avail. check 02 in the material master and the settings for the combination 02/AE (this is the checking rule used in VA02) are as you describe.
I don't understand where do you want me to assign BO. We don't have such checking rule defined for 02.
Moreover, I don't understand why you mention production orders, sales requirements and deliveries. I don't have problems with these. They are considered; it is the stock (sales order stock) which is not.
BR
Raf