The purpose of the report was to enhance the understanding of logistics within dairy production by investigating if theories of logistics concerning inventory functions and inventory management methods can be applied to dairy production, and if those theories can be used to analyze the costs for materials management. The research question was: What kind of inventory functions and inventory management methods are used within dairy production? The objective of the report was formulated as: To investigate if logistics theories concerning materials management can be used to analyze the costs of fodder inventory? Theories concerning inventory functions and inventory management where collected. To see if these theories could be applied to dairy production four interviews were conducted with different dairy production producers. From those four, two were selected for further research. At those two producers more interviews were held and the authors complemented the interviews with document studies. The gathered data where calculated and analyzed. Both inventory functions and inventory management methods were identified and therefore a cost analysis of the warehouse could be made. The findings of the report shows that it is possible to use the theories presented and that they should be used to develop dairy production.