An inventory model with dependent returns and disposal cost

Environmental legislation and customer expectations force manufactures to take back their products after use. In this paper a recovery system for a single item is studied, in which the random returns depend on the demand stream. The model is different from other works in this field by considering the effect of disposal cost at the end of the planning horizon, on the total inventory cost. The proposed model of this paper explains how to change the reorder point to maintain the optimal policy. The paper is also supported with some numerical example to demonstrate the implementation of the optimal reordering policy.

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