Optimal control of a remanufacturing system with consideration for product life cycle

This paper deals with the cost management problem of a remanufacturing system with stochastic variability in the demand rate, the remanufacturing rate and the discard rate. We consider two types of inventories. One is the actual product inventory in the factory while the other is the virtual inventory that is still in use by the consumers. The state of the remanufacturing system is defined by considering the levels of both inventories. The cost function is composed of various costs such as the holding cost, backlogging cost and other manufacturing costs. We obtain the optimal production policy that minimizes the expected average cost per period. Numerical results provide insights on the effects of the various costs on the optimal policy.