An inventory of rented equipment is studied. Equipment is withdrawn from the inventory by customers who use it for a length of time and then return it. Decisions about the amount of equipment to rent can be made at certain points in time. This paper describes a policy for making these decisions which minimizes expected costs. The dynamic programming model formulated is different than the usual ones considered in the literature because the inventory level can fluctuate up or down and convexity of the cost function is not important since simple optimal policies can be found when the cost function is nonconvex.