Abstract: Inventory is the critical strategy that requires cautious choice to turn into a creation. The choice turns out to be basic when the items are natural products, vegetables, pharmaceuticals, unstable fluids (crumbling items) and so forth., In this paper author explores manufacturer and buyer creation model for pharmaceuticals products with budget and floor space constraint. Lagrange's multiplier method is utilized to tackle this kind of issue. So as to diminish the total inventory cost, optimal order quantity and backorder levels are resolved and furthermore floor space and budget constraint should be fulfilled.