Internet of things (IoT) is a rapidly growing technology being used in different real life applications. Due to its smart interconnection among all the heterogeneous things, it is nowadays used in making smart homes, smart cities, smart classroom, library management, inventory management, and many more. The applicability of IoT using radio frequency identification device (RFID) in these areas is limited for basic operations only. As in inventory management system, RFID is used for payment purpose only, but it does not notify about the current location or current status of the things. Therefore, in this paper, an  IoT based smart inventory system (SIS) architecture is proposed that extends the existing inventory management system. In addition to RFID tags, the proposed system will make use of Wi-Fi enabled local position system (LPS) to track the current position of the things and to monitor the remaining quantity of the things in inventory.