This study explores the inventory management system of a medical center hospital. ABC analysis method was utilized to classify the subject items into A, B and C categories. Demand forecasting model was built based on half to one year's actual usage data. Continuous inventory monitoring system versus periodic inventory monitoring system were selected to regulate three category items' inventory level independently. A and B categories of medical dispensable materials took 91.03% monetary value, but only explain 17.96% stocking units. In order to fulfill more efficient inventory management system, class A and B items were suggested to apply Economic Order of Quantity with reorder point model (continuous monitoring system). Class C subject items were recommended to use maximum-minimum method combine with fixed interval ordering system (periodic monitoring system). Four alternatives concerning with improving current inventory management system were proposed. Based on those four alternatives the total inventory cost was evaluated independently. The results showed that combining E.O.Q. method with lead time variation control (alternative 4) had best performance using the minimum total inventory cost as indicator.