<em>Inventory level is such of important decision in maintaining both service level and efficiency. The accuracy of inventory level decisions is a determinant of business performance. This research is a case study of a dairy milk cooperative. The research aims to propose a probabilistic model in determining the inventory level of wheat pollard as raw material to produce concentrate. This research also shows the impact of the model on the business performance in terms of service level and inventory costs. The demand of wheat pollard is forecasted using Monte Carlo simulation involving 12 months past series data, while cycle inventory is estimated using a continuous review policy model. Currently, the cooperative must order 46 times to meet the needs of 690,000 kg a year of wheat pollard. The total inventory cost is IDR157.96 million with excess inventory of 13,819 kg a year. Using the proposed model, a safety stock of 4,307 kg must be in place to meet 98% service level. The expected shortage cycle is only 15 kg of the order of 60,000 kg, so the fill rate is expected 100%, and the total inventory cost is IDR110.11 million. It reveals that the proposed model can save inventory costs of IDR47.85 million without any excess or shortage of inventory. This research uses only a single price of the material. Further research is recommended to calculate inventory costs using dynamic real prices. The application of the probabilistic model of inventory management is rare research in the cooperative type of business.</em>