Space may be a scarce resource in manufacturing shops, warehouses, freight terminals, and container terminals. This Paper discusses how to locate temporary storage Inventories In limited storage areas. A typical inventory is delivered from the location of the preceding process to the storage area and stored In the storage area during the certain period of time. And it may be relocated from the storage position to another. Finally. it is delivered from the final storage area to the location of the next process. Because this logistic process for an inventory requires handling activities, transportation activities, and storage spaces, the limitation in capacities of handling equipment, transportation equipment, and storage space must be considered when allocating spaces to the inventory. This problem Is modeled as a multicommodity minimal cost flow problem. And a heuristic algorithm for the Problem is proposed. Numerical experiments are presented to validate the mathematical model and the heuristic algorithm.