Inertial Measurement Units, the main component of a navigation system, are used in several systems today. IMU's main components, gyroscopes and accelerometers, can be produced at a lower cost and higher quantity. Together with the decrease in the production cost of sensors it is observed that the performances of these sensors are getting worse. In order to improve the performance of an IMU, the error compensation algorithms came into question and several algorithms have been designed. Inertial sensors contain two main types of errors which are deterministic errors like scale factor, bias, misalignment and stochastic errors such as bias instability and scale factor instability. Deterministic errors are the main part of error compensation algorithms. This study explains the methodology of how the deterministic errors are defined by 27 state static and 60 state dynamic rate table calibration test data and how those errors are used in the error compensation model. In addition, the stochastic error parameters, gyroscope and bias instability, are also modeled with Gauss Markov Model and instant sensor bias instability values are estimated by Kalman Filter algorithm. Therefore, accelerometer and gyroscope bias instability can be compensated in real time. In conclusion, this article explores how the IMU performance is improved by compensating the deterministic end stochastic errors. The simulation results are supported by real IMU test data.