Abstract:
Manufacturing companies need to have the ability to fulfill the demand of customers to gain profit and ensure the sustainability of the company. PT. Z is one of the companies that produce drugs in Indonesia. This company has several family products which are, oncology products, respiratory products, and some family products. In 2020, the company experienced an overstock of more than 3000 boxes. Because of that problem, the company wishes to have more proper inventory model to reduce the overstock with the budget limitation to stabilize their finances. With the simple EOQ, both the current condition and proposed condition are not satisfied the budget limitation, so that is why the Lagrangian multiplier applied. Using a Lagrangian multiplier, the total investment can be reduced from 5,232,863,875.69 to 4,998,160,000.00 and it satisfied the budget constraint.
