BackgroundToday, manufacturing companies are facing greater demands regarding customer customization leading to higher competition regarding meeting demands for high quality, low cost of production with short lead times. It is vital that companies prioritize and make the right trade-offs between resource utilization, capitalization and delivery service. With a well desired inventory management, the lowest possible inventory levels can be developed to meet the desired customer service policy. Lower inventory levels also contribute to reduced capitalization and inventory costs.The study was carried out at O-fabriken, at VCE Skövde, where end-processing and assembly of valve seats and valve guide in the cylinder heads are installed. O-fabriken has experienced some uncertainties regarding how many processing tools that needs to be in circulation, given a certain volume of production. At the company there is currently no detailed plan for how the inventory control should be carried out. The inventory control is carried out largely by experience, which means that the number of processing tools in circulation is difficult to estimate. PurposeThe purpose of this study was to investigate how the inventory control of processing tools can be rationalized in order to reduce costs and secure management of tools. The study aimed further to:1. Identify which factors affect the handling and storage of cutting processing tools.2. Describe how cutting processing tools can be protected to avoid damage of personnel and tools.3. Develop an inventory control model that highlights the input parameters that effect the turnover of the number of processing tools.MethodThe study has been conducted using a qualitative research approach. A deductive research approach has been used as the starting point was taken in an already existing theory within inventory control, inventory planning, Tool Management, safety and safekeeping. The research strategy in this study consists of a case study and has during the period January to June 2012 been performed at O-fabriken, VCE. The data collection has been gathered through data observations, interviews and benchmarking. ConclusionThe result of the study demonstrates that many of the factors that affect the handling of a storage of cutting processing tools also exist within inventory control of items. However, there are some changes that are needed to be done in order to adapt inventory control to processing tools and avoid damage to personnel and tools. Following factors have been found to be important to consider when handling and storing tools: service levels, inventory turnover, storage systems, ABC-classification, repair capacity, safety, 5S, speed of refill, system availability, maintenance scheduling and information exchange. Processing tools should be stored in sealed storage system with high capacity and high reliability. When designing the inventory management model a first step was to develop the parameters that affect inventory control of processing tools. Subsequently, information was gathered about each parameter in order to perform calculations regarding the number of processing tools in turnover and associated costs with savings opportunity.