This thesis was commissioned by Keslog Ltd and its purpose was to examine and develop the material flow management of K-Citymarket Ltd from the perspective of inventory management. The aim was to improve the cost-effectiveness of the inventory by developing the material flow management of the warehouse. The research was carried out using qualitative interviews, which examined the current state of the material flow and reinforced the author's knowledge of the material flow of the warehouse, acquired through work experience. There was also an aspect of quantitative research in this project when obtaining delivery data from the production control system.

The theory section covers the theory of logistics, the supply chain, material flow management, inventory management, production planning and control, as well as demand forecasting. The emphasis in the theory is on inventory control and demand forecasting, because they are the more important components of warehouse material flow management, and the author of this thesis considered them to be essential to achieve the objective of the thesis.

The main development proposals given in the thesis included an ABCanalysis and developing production forecasting. The ABC-analysis was compared with the current product placement model and through computational comparison it proved to be more efficient than the current model. The development proposal is a new product placement model based on the ABCanalysis. The development proposal for production forecasting is a forecast that utilizes the existing production forecast and is more accurate.

How the objectives of the thesis were met was evaluated by computational comparisons, since there was no time to try out the development proposals during the completion of the thesis. Calculations showed the potential of the development proposals for improving the cost-effectiveness of store keeping. In the future, further development of product placement and production forecasting would enable more accurate planning and more efficient production.