Efficient inventory management is essential for manufacturing firms to ensure operational smoothness and financial viability. This study investigates the challenge of excessive finished goods inventory at PT. XYZ, a plastic product manufacturer in Indonesia, with the goal of achieving an average inventory average level of 10,000 pieces per week. Integrating Six-sigma DMAIC methodology and System Dynamics modelling allows for the identification of interventions in machine allocation, packing labor, and delivery policies. Through Six-Sigma DMAIC and System Dynamics analysis, interventions are developed based on root cause identification and simulation outcomes. Proposed interventions include increasing dedicated machines from 5 to 10, augmenting the packing workforce from 5 to 10 individuals, and adjusting the delivery policy from every 8 days to every 7 days. Projections suggest that by implementing these interventions, PT.XYZ will attain the target inventory level by week 31 of 2024, while maintaining an average productivity performance of 23.67 pieces per man-hour. This underscores the efficacy of an integrated approach in effectively addressing inventory challenges in manufacturing firms.