diff --git a/packages/schema/src/plugins/zod/utils/schema-gen.ts b/packages/schema/src/plugins/zod/utils/schema-gen.ts
index e6a335221..5f3321b94 100644
--- a/packages/schema/src/plugins/zod/utils/schema-gen.ts
+++ b/packages/schema/src/plugins/zod/utils/schema-gen.ts
@@ -141,10 +141,14 @@ export function makeFieldSchema(field: DataModelField) {
     }
 
     if (field.attributes.some(isDefaultWithAuth)) {
-        // field uses `auth()` in `@default()`, this was transformed into a pseudo default
-        // value, while compiling to zod we should turn it into an optional field instead
-        // of `.default()`
-        schema += '.nullish()';
+        if (field.type.optional) {
+            schema += '.nullish()';
+        } else {
+            // field uses `auth()` in `@default()`, this was transformed into a pseudo default
+            // value, while compiling to zod we should turn it into an optional field instead
+            // of `.default()`
+            schema += '.optional()';
+        }
     } else {
         const schemaDefault = getFieldSchemaDefault(field);
         if (schemaDefault !== undefined) {
diff --git a/packages/schema/src/utils/pkg-utils.ts b/packages/schema/src/utils/pkg-utils.ts
index 82b5ef019..067810a8e 100644
--- a/packages/schema/src/utils/pkg-utils.ts
+++ b/packages/schema/src/utils/pkg-utils.ts
@@ -13,7 +13,7 @@ export type PackageManagers = 'npm' | 'yarn' | 'pnpm';
  * @export
  * @template e A type parameter that extends boolean
  */
-export type FindUp<e extends boolean> = e extends true ? string[] | undefined : string | undefined
+export type FindUp<e extends boolean> = e extends true ? string[] | undefined : string | undefined;
 /**
  * Find and return file paths by searching parent directories based on the given names list and current working directory (cwd) path.
  * Optionally return a single path or multiple paths.
@@ -28,7 +28,12 @@ export type FindUp<e extends boolean> = e extends true ? string[] | undefined :
  * @param [result=[]] An array of strings representing the accumulated results used in multiple results
  * @returns Path(s) to a specific file or folder within the directory or parent directories
  */
-export function findUp<e extends boolean = false>(names: string[], cwd: string = process.cwd(), multiple: e = false as e, result: string[] = []): FindUp<e> {
+export function findUp<e extends boolean = false>(
+    names: string[],
+    cwd: string = process.cwd(),
+    multiple: e = false as e,
+    result: string[] = []
+): FindUp<e> {
     if (!names.some((name) => !!name)) return undefined;
     const target = names.find((name) => fs.existsSync(path.join(cwd, name)));
     if (multiple == false && target) return path.join(cwd, target) as FindUp<e>;
@@ -38,7 +43,6 @@ export function findUp<e extends boolean = false>(names: string[], cwd: string =
     return findUp(names, up, multiple, result);
 }
 
-
 /**
  * Find a Node module/file given its name in a specific directory, with a fallback to the current working directory.
  * If the name is empty, return undefined.
@@ -54,11 +58,11 @@ export function findNodeModulesFile(name: string, cwd: string = process.cwd()) {
     if (!name) return undefined;
     try {
         // Use require.resolve to find the module/file. The paths option allows specifying the directory to start from.
-        const resolvedPath = require.resolve(name, { paths: [cwd] })
-        return resolvedPath
+        const resolvedPath = require.resolve(name, { paths: [cwd] });
+        return resolvedPath;
     } catch (error) {
         // If require.resolve fails to find the module/file, it will throw an error.
-        return undefined
+        return undefined;
     }
 }
 
@@ -86,7 +90,7 @@ export function installPackage(
     projectPath = '.',
     exactVersion = true
 ) {
-    const manager = pkgManager ?? getPackageManager(projectPath);
+    const manager = pkgManager ?? getPackageManager(projectPath).packageManager;
     console.log(`Installing package "${pkg}@${tag}" with ${manager}`);
     switch (manager) {
         case 'yarn':
diff --git a/tests/regression/tests/issue-1378.test.ts b/tests/regression/tests/issue-1378.test.ts
new file mode 100644
index 000000000..29d4b16a8
--- /dev/null
+++ b/tests/regression/tests/issue-1378.test.ts
@@ -0,0 +1,47 @@
+import { loadSchema } from '@zenstackhq/testtools';
+
+describe('issue 1378', () => {
+    it('regression', async () => {
+        await loadSchema(
+            `
+            model User {
+              id   String @id @default(cuid())
+              todos Todo[]
+            }
+            
+            model Todo {
+              id String @id @default(cuid())
+              name String @length(3,255)
+              userId String @default(auth().id)
+          
+              user User @relation(fields: [userId], references: [id], onDelete: Cascade)
+              @@allow("all", auth() == user)
+          }
+          `,
+            {
+                extraDependencies: ['zod'],
+                extraSourceFiles: [
+                    {
+                        name: 'main.ts',
+                        content: `
+                  import { z } from 'zod';
+                  import { PrismaClient } from '@prisma/client';
+                  import { enhance } from '.zenstack/enhance';
+                  import { TodoCreateSchema } from '.zenstack/zod/models';
+                                    
+                  const prisma = new PrismaClient();
+                  const db = enhance(prisma);
+
+                  export const onSubmit = async (values: z.infer<typeof TodoCreateSchema>) => {
+                    await db.todo.create({
+                      data: values,
+                    });
+                  };
+                  `,
+                    },
+                ],
+                compile: true,
+            }
+        );
+    });
+});