The operational activities of a community hospital blood bank are described at all levels with special attention given to the inventory management of the bank. A distinguishing feature of this blood bank is the use of a centrifuge-freezer system which, prior to the ten day age limit, breaks down whole blood into its basic constituents, and stores them for extended periods fare exceeding the normal twenty-one day shelf life of whole blood. The inventory management policies thus include regulating the input of blood into the bank, the transfer of blood from the refrigerator to the freezer and the issuing policy of blood for various medical needs. Concomitant to these problems is the problem of forecasting demand. In addition to containing a descriptive model with all its complexity, this paper includes simulation study which compares the operational characteristics (shortage, wastage and cost) of the blood bank with and without the freezer system.