Abstract: Inventory management is used to make decisions regarding the appropriate level of inventory. In practice, all inventories cannot be controlled with equal attention. In this paper the inventory level is decided based on part demand, cost, and supplier location, Share of business and status of receipt. Using ABC analysis the various parts are classified into A, B and C based on its cost. A suitable bin with its rack has to be selected based on the size of the part. Stores layout is designed based on the ABC classification, Bin selection and rack design with the available space constraint. The existing kanban system has to be modified into supplier e-kanban system by which the speed of information sharing between suppliers will be improved.