<![CDATA[Inventory of raw materials plays a crucial role in the production process as it serves as the foundation supporting the smoothness and continuity of production. Both excess and shortage of raw material inventory have the potential to incur losses for the company. PT. XYZ is a company engaged in the plywood industry. The issue faced by PT. XYZ is the frequent ordering of more materials than the demand. This can lead to excess capacity and increased storage costs. Due to limited storage capacity, the quantity of orders must also be considered. The objective of this research is to achieve optimal inventory control of veneer while considering warehouse capacity to minimize total inventory costs. The method used is Lagrange Multiplier. Based on the research results, the total calculation results for new storage space are 586.64 m3, with orders for sengon veneer at 431 m3, jabon veneer at 379 m3, and mixed veneer at 336 m3. These values have reached optimal conditions because the order sizes do not exceed the warehouse's veneer material capacity, thereby avoiding overcapacity of raw materials. The total inventory cost obtained using the Lagrange Multiplier method is Rp 263,069,005. Thus, it can be concluded that the Lagrange Multiplier method can provide a minimal inventory solution in terms of the company's total inventory costs.]]>
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