It is due to an aspect of innovation and change in consumer behavior that the retail market has been changing over time and creating new physical store formats. One example is neighborhood stores, which are small and specialized, which aim to serve convenience and seek to make the best use of physical spaces in strategic locations. However, in order to manage the inventory of goods in a small and limited space, it is also necessary to focus on improving inventory management, in order to serve customers and to avoid excess waste and sales losses due to disruptions. Thus, the objective of this paper is to study the existing inventory scenario of nine convenience stores of a Brazilian retail chain and, using the traditional inventory management model found in the literature, find answers to the questions of when to order and how much to order of merchandise. In addition, this research further raise the question of how much safety stock should been kept to avoid unbalance, and in order to answer these questions, it is necessary to address the balance between costs, service level and available physical space. The study results aggregate the values found with the quantitative calculations together with a qualitative analysis regarding the existing space in the analyzed stores. In addition, the conclusions were that for the balance between cost, service level and physical space limitation the replacement point values and lot size would be sufficient for a 95 per cent service level.